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In recent times Risk Management has emerged as one of the primary considerations for Directors and Senior Management, no matter how large or small the organisation. Our perspective is that every business decision involves risk taking. The challenge is to to make such decisions in an informed manner to ensure maximum benefit and “no surprises”. While the term Enterprise Risk is now in common usage, in our experience very few organisations have a genuine enterprise wide risk system, while many have no system of risk identification or management at all.
Fortunately there are now a number of guidelines and many organisations have mandatory risk standards that have to be met. Under the ASX Corporate Governance Guidelines the board is responsible for reviewing the company’s policies on risk oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control.
Despite the number of reference points and increased awareness there is very little practical guidance for Directors and Senior Management who need to respond to the risk management challenge. We assist Directors to discern just which risks are relevant to their business and to implement appropriate top down risk management strategies. We do this by profiling the organisation through a series of interviews with internal and external stakeholders and by collating a risk register that shows the raw risks as they stand today. We then work through those risks to assess each of the main risks and help to determine their Risk Appetite. Once this is agreed we then work with key internal stakeholders within the business to implement risk mitigation and management procedures to meet the agreed appetite. Finally we establish risk monitoring and reporting procedures to ensure that the risks are being managed as intended going forward and that management and directors are receving meaningful reporting on risk. The outcome is a forward focused risk management system which is owned and directed by directors, overseen by senior management on a day to day basis and embedded in business processes and organisational culture.
Of course this is a very potted summary of a complex issue. To find our more about our Risk Management Consulting Services please call Greg Goodman on 0411 825 458.
Facing the challenge“Today, risks don’t fit into easy categories or emerge from pre-determined place. They assault from all sides. It may surprise you to know that at least half of all corporate crises are caused by senior management action rather than external forces. I firmly believe that the most successful, least crisis-prone businesses will be those whose boards have shown firm resolve and taken decisive action. Effective, integrated strategies for dealing with tomorrow’s risks require a change in culture at board level now.”
(Lord Peter Levene, Chairman of insurance giant Lloyds speaking at the World Affairs Council).