Friday, October 21, 2022


 It’s important to develop an effective risk management model for integrating all crucial elements such as people, processes, technologies, tools, culture, etc. to model, manage, and measure risks systematically.

We live in a world with a mix of physical and virtual reality, order and chao, opportunity and risk, fear and favor, etc. Risk is part of reality in running business today, however, most of today’s risk management is reserved for huge and costly endeavors. 

It’s important to gain a holistic understanding of the business value of risk management, look at the effectiveness of the risk management strategy, methodology, and practice, not just for protecting its financial value, but also including people value, reputation value, brand value structurally.

Risk forecast: Change is the new normal, risk is part of business reality. Lack of risk awareness creates more blind spots uncovered and gaps unfilled. It requires the stakeholders to open their perspectives or framing on what they are observing. In reality, what are the risk management blind spots? Is it caused by the immature and shortsighted risk management program? Business professionals, especially executives, would love to be able to predict future trends - emerging opportunities and hidden risks based on current and historical data, discovered patterns and other cause-effect reasoning. Risks and opportunities go hand in hand. There is possibly a different scenario in which the identification of negative risks unearths an opportunity.

Forward-thinking companies leverage information based analytics to provide business foresight about upcoming opportunities or risks, so they can adjust their strategy accordingly to keep evolving. The interdictive analysis based on quality information helps business management gain insight about upcoming risks, fierce competition or uncontrollable cost, etc. Insightful business leaders and professionals are the ingenuous factor to make better forecasts, create engagement around insight & foresight for leading effective decision making. There’re many things that are unpredictable yet, you just have to prepare for the different scenarios.

Risk context:
The analysis of risk is only proportional to how well you understand the risk. Risk is contextual; usually, you only see the risk based on your own or some group effort to perform an analysis on the organizational system in question. Because the business ecosystem keeps changing dynamically. At a certain level, the things you view which help you with risk analysis, are only silo or static views of the system. Thus, risk management needs to be dynamic and holistic in adapting to the increasing pace of change. If a company has reached a state of some stable emergent behavior, then risk analysis protocols are more likely to harm the system in question, the business or design etc.

Risk management logic is often nonlinear; causation is always within a context. So contextual understanding helps people shape an insightful view of the complex problem with hidden risks, and broaden people’s perspective of cause and effect. Assuming the risk is highly likely to occur, the corporate management needs to clarify cause-effect, causation-correlation behind risk management, as well as how to improve risk management process intelligence, and tailor different solutions to manage diverse risks successfully.

Risk appetite and high risk intelligence:
Risk is inevitable to survive in today’s “VUCA” reality, insight keeps you calm down about the potential risks. Stakeholders ranging from investors to customers, to ordinary citizens, to peer companies might all benefit or suffer from the risk intelligence of a company. Organizations need to have the right dose of risk appetite and high risk intelligence. It’s important to apply critical thinking to identify potential risks; leverage system understanding to see the connections and interdependence of business reality in order to improve risk management effectiveness.

Preventing problems, managing risks and enabling continuous improvement require the power of information, leadership support, and integrated data-based insight. In reality, too few business enterprises have appropriately aligned or devoted sufficient resources to their respective risk, compliance, ethics, governance efforts. Risk management is everyone’s responsibility, the top leadership team needs to set the right appetite for risk management, the risk management processes and practices need to be integrated into a variety of management disciplines, to increase risk intelligence and improve organizational effectiveness.

In face of unprecedented opportunity and risk for organizations today, every opportunity has risks in it, and every risk also has opportunities in it. It’s important to develop an effective risk management model for integrating all crucial elements such as people, processes, technologies, tools, culture, etc. to model, manage, and measure risks systematically. Risk management needs to lift up from risk control to risk intelligence which can identify the potential business growth opportunities, uncover hidden pitfalls, prevent risks effectively, to drive transformative change smoothly.


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