Evaluating and
Managing Risk
In today's fast moving economic climate, evaluating and managing risk is essential to the future success of any business.
The Changing Landscape of Risk
Changing Risk Profiles
The business environment has changed significantly as a result of the world economic downturn, and as a result the risk profiles are changing rapidly.
Adding Considerable Value
Risk management has become a vital ingredient in the entrepreneurial culture needed to develop, expand and improve business performance. There is clear evidence that good risk management will add considerable value to the business.
Critical Success Factor
The ability to manage significant risks effectively is an increasingly critical success factor for all organisations, irrespective of the sector they represent.
Avoiding Disaster
Badly informed or poorly executed risk management can easily spell disaster, as recent high profile failures have demonstrated.
Enterprise Risk Management (ERM)
The requirement for an enterprise approach to risk management (known widely as ERM) is therefore crucial for modern operations. ERM brings a comprehensive perspective to managing uncertainty across the board.
How We Can Help
Most organisations will now have a formal programme to evaluate and record their most significant risks. But has this been a positive experience?
- Can you demonstrate measurable benefits as a result?
- Did your organisation embrace the need enthusiastically or regard it as another passing fad?
- Have you identified new areas of exposure?
- Have you identified any over controlled activities – and taken action to reduce the unnecessary controls?
The key is to adopt a simple but comprehensive approach focussing on specific deliverables and benefits.
1. ERM Key Aspects
- The role and responsibilities of directors and senior management
- Selling the benefits to top management
- How to quantify and measure risk using a simple and consistent approach
- Defining risk as ‘what can stop you achieving objectives’ rather than ‘what can go wrong’
- ‘Ring fencing’ risk exposure - never allowing one part to impact the whole
- Determining and communicating your attitude to risk to stakeholders
- Recognising that reputation is both your biggest asset and risk
2. Advanced ERM Process
- Most organisations have realised more attention is needed to enhance ERM.
- Advanced ERM extends the evaluation to become a forward looking strategic business process.
- Risks are evaluated based on business materiality and opportunity.
- New understandings emerge, and efficient controls are implemented to drive advantage.
- The ultimate focus becomes strategic risk management.
3. ERM & Decision Making
- Insist that a full risk analysis is submitted for board proposals
- Match key risks to corporate objectives each year
- Ensure that you under promise and over perform
- Invite all key stakeholders to a structured risk workshop
- Analyse the major surprises and near misses from the last 12 months
- Prepare media statements in advance for potential crises
- Develop a corporate opportunity register
- Offer special incentives for ideas to reduce risk or exploit opportunities
4. Business Continuity & Crisis
- Determining strategies to deal with major disruption events
- Ensuring that ISO 22301 standards are adopted
- Conducting gap analysis of current business continuity policies
- Development of robust procedures to recover from a disaster
- Testing the business recovery process thoroughly
- Establishing a Business Continuity culture across the organisation
5. Third Party Risks
- Identifying risks in third party relationships
- Outsourcing objectives and transfer of risk
- Outsourcing delivery models
- Assessing the contract framework
- How to assess continuing viability (performance management)
- Picking the wrong contractor
- Higher costs or payment issues
- Negative impact on service
- Loss of control, knowledge, or resources
- Difficulty of back-sourcing (bringing activity in-house)
- Conflicting objectives or contract variations
6. Reputation Management
- The rise of reputation as a paramount risk
- The necessity of a positive image and being admired
- Understanding where reputation originates and how to measure it
- The magnifying effect of business failures on reputation
- The explosion of regulation and external assurance requirements
7. Cybersecurity
To be developed with your new partner.
8. The Fraud Risks
The raft of high-profile corporate scandals as well as new regulations world-wide, has spotlighted that fact that businesses need to take the threat of fraud very seriously.
This has led to the requirement for specific anti-fraud measures to address both internal and external fraud and misconduct.
Most managers assume that having good controls in place will significantly reduce the risk of fraud – the reality is that as many fraudsters are senior personnel, they will know the controls and how to bypass them (however sophisticated you think they may be).