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It’s important to improve risk intelligence by integrating all crucial elements such as people, processes, technologies, tools, talent, communication, culture, etc.

In face of overwhelming growth of information, multifaceted complexity, and unprecedented uncertainty, risk is part of reality in running business today. Lack of risk awareness creates more blind spots and gaps unfilled.

 Most of today’s risk management is reserved for costly endeavors. The more diverse, regulated, and geographically dispersed an organization is or becomes, the more important an integrated risk management needed to improve business agility, intelligence, and maturity.

It’s important to initiate bottom-up-driven risk activities: Running a business is complex, in building an effective organization, risk management is not an isolated discipline, one team or division’s daily tasks, it is everyone’s responsibilities of the company, across the business hierarchy. Risk management needs to clarify many factors such as the company goals, policies, processes; involving both top-down sponsorship, planning and bottom up initiatives & implementation.

A top-down only approach will fail because they cannot influence enough initiative across the business boundaries. Bottom up consensus approach requires healthy feedback-feedforward cycle. If you can’t get a strong bottom-up initiative going, risk management would have limitations to achieve expected results due to cultural inertia and cross-functional fricions. Risk management should not be a separate function, but rather taken as guidelines of business best-practices executed in portfolio management to improve organizational effectiveness and maturity.

It’s constant effort to develop risk management next practices: Opportunities and risks permeate everywhere in the organization. Often a big risk is that the risk management system is detached from the real management of the business. By categorizing the different types of risks systematically, business management can pay more attention to the company's bottom line operation and top-line strategic growth.

In order to improve risk management effectiveness, it means stepping away from the accepted "best practice" and asking whether a fundamentally different approach would provide more flexibility, sensitivity, and responsiveness. It’s important to embed risk management into business process management; embed risk identification and assessment in operational processes including project management to improve organizational agility and effectiveness.

It’s crucial to define and clarify risk metrics, from tactical to strategic KPIs: The goal for risk management including quantification is to build a solid understanding of decision support and manage risks effectively. The risk management metrics tell management when something in the business is going wrong; or when something in the business or process can be improved. Metrics also help with creating the sense of urgency, which is important for continuous improvement. Once risks have been identified, each has a risk measurement which tries to be determined and scored objectively.

The premise of trying to quantify the value in a monetary sense is only relevant to the extent you want to evaluate options to mitigate the identified risk. The peril of measurement management such as the wrong metrics selection or ineffective measurement practices further causes in-effective decisions and mismanagement.

It’s important to improve risk intelligence by integrating all crucial elements such as people, processes, technologies, tools, talent, communication, culture, etc, to model, manage, and measure risks systematically, and refine crucial business factors to improve risk management maturity for achieving desired strategic outcomes.

Posted in: Digital Pitfalls,GRC,KPIs