It’s always important to take structural initiatives for making a smooth transition from risk mitigation to risk intelligence; from risk control to value creation for leading transformational change successfully.
How to take initiatives to identify the variety of risks, identify some opportunities, be well prepared for the possible disruptions, prevent potential risks or what can be done to make business more resilient, manage risks effectively, and move the business forward at a steadfast speed?
It’s important to take initiatives for defining and communicating a clear, consistent, enterprise-wide message about healthy risk appetite and a variety of possible situations and risk scenarios: Organizations need to become more agile for adapting to a fast-changing environment. Simply risk control is not enough, organizations need to set the right risk appetite, have the right dose of risk tolerance to improve business changeability and resilience. As part of implementing the Enterprise Risk Management system, companies should put in place a risk appetite system that goes beyond high level statements. Risk appetite implies a certain business ability to actually measure risk level.
The optimal risk management is multi-dimensions of planning. The risk-management needs to ponder: "What can go wrong? And, what can I do about it?'' You can then use the more granular risk appetite statements to monitor risk taking in the business. Thinking about what can go wrong absolutely can lead to new opportunities. As long as risks have been identified and agreed with stakeholders as per business need, then you can predict, optimize and consider a continual and sustainable approach with multi-faceted perspectives, and specific threshold for justifying opportunities and business outcome.
It’s important to create a safe environment for learning from failures, accept and own the right risks to achieve competitive advantage: Due to the fast pace of changes, the digital workplace today needs to become dynamic and informative, to help people feel more comfortable about the “VUCA'' new normal, The digital workplace will be shaped by changes that take place in the way people relate to themselves and to their experience of their environment and others around them. It’s important to gain a balanced viewpoint about failures and risks. When people re-frame the word "failure" to be more positive, they open the door to learning. They can take the right level of risk for exploring different ways to do things, present resilience to fail faster, fail forward.
Resilience helps individuals or organizations bounce back from all these difficult experiences. People should not be paralyzed fearlessly if there are potential risks or possible failures, and they should learn to embrace them. When they are ready and willing to ask questions as to what was the source of failure, what could be potential risks, what worked, what didn't, why, etc, they are on the path to gain value.
It is strategic to apply a value oriented enterprise risk management approach 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. Every risk has opportunities in it. It’s important to accept and own the right risks to achieve competitive advantage by improving controls around key processes, using analytics to optimize decision-making and build an ineffective risk management portfolio.
In business, there are two types of risks: negative (loss of value, and business) & positive (opportunity to make profit, expand the business, and create value). Some risks can be quantifiable; some can only be approximated, which is not good enough. 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. A value oriented enterprise risk management approach can integrate people, process, technology seamlessly to improve business risk intelligence, also using risk management savings to fund strategic corporate initiatives for creating business value and improving high return on investment.
The economic turmoil makes all businesses large or small to rethink their risk management strategy. The efforts on managing risk holistically or in a more integrated fashion are critical for the long run, as financial performance is highly correlated with the level of integration and coordination across risk, control and compliance functions of the organization. It’s always important to take structural initiatives for making a smooth transition from risk mitigation to risk intelligence; from risk control to value creation for leading transformational change successfully.
It’s important to take initiatives for defining and communicating a clear, consistent, enterprise-wide message about healthy risk appetite and a variety of possible situations and risk scenarios: Organizations need to become more agile for adapting to a fast-changing environment. Simply risk control is not enough, organizations need to set the right risk appetite, have the right dose of risk tolerance to improve business changeability and resilience. As part of implementing the Enterprise Risk Management system, companies should put in place a risk appetite system that goes beyond high level statements. Risk appetite implies a certain business ability to actually measure risk level.
The optimal risk management is multi-dimensions of planning. The risk-management needs to ponder: "What can go wrong? And, what can I do about it?'' You can then use the more granular risk appetite statements to monitor risk taking in the business. Thinking about what can go wrong absolutely can lead to new opportunities. As long as risks have been identified and agreed with stakeholders as per business need, then you can predict, optimize and consider a continual and sustainable approach with multi-faceted perspectives, and specific threshold for justifying opportunities and business outcome.
Resilience helps individuals or organizations bounce back from all these difficult experiences. People should not be paralyzed fearlessly if there are potential risks or possible failures, and they should learn to embrace them. When they are ready and willing to ask questions as to what was the source of failure, what could be potential risks, what worked, what didn't, why, etc, they are on the path to gain value.
It is strategic to apply a value oriented enterprise risk management approach 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. Every risk has opportunities in it. It’s important to accept and own the right risks to achieve competitive advantage by improving controls around key processes, using analytics to optimize decision-making and build an ineffective risk management portfolio.
The economic turmoil makes all businesses large or small to rethink their risk management strategy. The efforts on managing risk holistically or in a more integrated fashion are critical for the long run, as financial performance is highly correlated with the level of integration and coordination across risk, control and compliance functions of the organization. It’s always important to take structural initiatives for making a smooth transition from risk mitigation to risk intelligence; from risk control to value creation for leading transformational change successfully.
0 comments:
Post a Comment