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Companies that think of only risks when they talk of risk management are potentially missing the benefit of growing their business with the wisdom of their risk knowledge.

Nowadays, opportunities and risks co-exist, risk management is the discipline of managing risks and opportunities; risk intelligent organizations allocate sufficient time to identify opportunities whilst they are managing their risks. 

Strategic risk management actually creates value by identifying opportunities to capitalize on uncertainty and volatility to maximize gains and improve competitive positioning.

Assess business risk profile: In high mature organizations, risk management is already an integral compe­tency and top priority for C-Suite executives, providing them a holistic process for connecting the dots on managing risk across the organization effectively. There’re a growing number of organizations shifting their risk management orientation from bottom-up to top-down, with more senior management and board involvement to assess risk profiles and improve risk management from risk mitigation to risk intelligence.

Uncertainties, inherent variability, and the unknown interdependencies are among sources of risks; strategic risks perhaps cause fatal business failures. Any risk management infrastructure, regardless of the level of risk management maturity of the organization, should be able to alert senior management and the board that this is happening; focusing on strategic risks for board presentations to feed strategic planning and decisions. Strategic risk is auditable; from a GRC perspective those accountable for oversight such as BoDs have to establish just how deep they wish to probe strategy and risk, identifying and assessing risks and adjusting the business speed.

Grasp value creation opportunities: Create a safe environment for learning from failures, accept and own the right risks to achieve competitive advantage, use a value oriented enterprise risk management approach, leverage risk management savings to fund strategic corporate initiatives. Information is one of the most invaluable assets of the company, risk management can apply advanced analytics tools to increase decision-making effectiveness, improve controls around key processes and optimize risk portfolio, to achieve superior returns from risk investments.

Strategic risk is knowingly assuming a risk that is worth the effort to predict, analyze, because it is believed that the potential reward outweighs the potential downside. It's crucial to provide information to the assurance lines that evaluate the business risk profile for analytical breakthroughs and managing the “shade of gray” effectively. The risk management can take charge with risk issues and have been seeking to improve their ability to define and communicate a clear, consistent, enterprise-wide message about healthy risk appetite and a variety of possible situations and risk scenarios.

Optimize cost in risk management effort: Generally, risk management is costly; the more thorough the approach -challenging assumptions, and unintended consequences, the greater the cost. The challenge for management is to have visibility and traceability between costs and the assets consuming those costs in risk management initiatives, reducing the cost of the current business process. In fact, companies that lacked the skills to manage cost effectively suffered compared with competitors that had mastered those skills. Potentially a larger cost management opportunity is the transparency in sourcing decisions to allow for cost-effective sourcing strategy.

As financial performance is highly correlated with the level of integration and coordination across risk, control and compliance functions. The management also needs to assess how much time organizations spend sorting and classifying risks versus exploring and evaluating opportunities. The secret to risk management effectiveness is the degree to which delegation can be leveraged in "processing" risks. If senior risk managers have to micromanage all risks, eventually, key risks or opportunities will not be effectively managed.

Organizations that think of only risks when they talk of risk management are potentially missing the benefit of growing their business with the wisdom of their risk knowledge. Risk management needs to get integrated, risk management works best when it is part of the culture and a management core competency. The efforts on managing risk holistically or in a more integrated fashion are critical for the long run,

Posted in: GRC