Organizations need to have the right dose of risk appetite and high risk intelligence.
As a matter of fact, businesses can be at risk for survival at any minute due to continuous digital disruptions or fierce competitions. How to increase organizational risk awareness and improve risk management intelligence?
Initiate inquiries to uncover risks: In the business world, risks happen almost on a daily basis. In order to clarify the strategic goals, you must ask “why” enough times to uncover the negative factors that create a divide between the vision of the desired future and the current reality. Besides fragile processes, outdated technologies, there are "human factors" such as irrational, cognitive, or behavioral aspects increasing the risk of complex problem-solving success. Running a business is about solving problems big or small. Problem-solving today is complex. Root causes can be identified by using the “5 WHYs'' techniques to define the cause and effect relationships that allow you to uncover the deeper causes, and develop stepwise actions.
It becomes complex if things do interact, particularly in the case of nonlinear interconnection and interactions. Understand nonlinear cause and effect relationships and models in dealing with complex business circumstances and use a structured methodology that allows people to capture and analyze the results. The business management is confident as they have applied sufficient rigor in applying the “why” staircase technique many times over. After tracing down the root cause, they can leverage the limited resources, take cross-boundary collaboration for fixing problems.
When you think of scenario planning, think of risk management. What strategies or small low-risk steps you might take now that can better position you to more quickly identify or turn the disruption into your advance. A good scenario planning provides insight into whether an identified risk is becoming real and to meter any investment to deal with it based on the monitored results.
Leverage analytics and "gut feeling" to bridge multitude of insight gaps and uncover potential business risks: Information based intelligence touches almost every critical aspect of business. In practice, businesses are using a variety of analysis tools to do problem diagnosis risk analysis for improving manageability. The management should make an objective assessment of their organizational risk appetite and risk intelligence.
In reality, most of today’s risk management is reserved for huge and costly endeavors; there is no amount of quantitative analysis that can accurately predict what harm or which opportunity lies ahead. To improve change and strategy management success rate, provide information to the assurance lines that evaluate the business risk profile for analytical breakthroughs. Businesses should adapt that context at point of predictive analysis to identify the upside from a specific uncertainty they are threatened with for opportunity management.
Organizations need to have the right dose of risk appetite and high risk intelligence. It’s important to develop business capabilities to tolerate ambiguity, deal with complexity, proactively manage risks and uncertainty structurally. Stakeholders ranging from investors to customers, to varying partners all benefit from the risk intelligence of a company and improve organizational effectiveness and maturity.
Organizations need to have the right dose of risk appetite and high risk intelligence. It’s important to develop business capabilities to tolerate ambiguity, deal with complexity, proactively manage risks and uncertainty structurally. Stakeholders ranging from investors to customers, to varying partners all benefit from the risk intelligence of a company and improve organizational effectiveness and maturity.
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