Monday, January 9, 2023

InitiativesofRI

It’s important to shift mentality from “risk-avoidance” to “risk management” and risk intelligence .

In business, every day is a risk; there are different types of risks; there are diverse viewpoints and different emphases about risks. Solid risk management enables the accumulation of abundant information and enough resources to thrive by capturing opportunities in it and adapting to the uncertainty and changes. 

Go beyond short-term gain; make a long-term investment; the efforts on managing risk in a more integrated fashion are critical in the long run; so organizations have a better opportunity to shift from surviving to thriving mode; from risk management to risk intelligence (RI).

Risk management has strategic dots that need to be connected for increasing risk intelligence: A quality strategy is dependent on sound risk management practice. Risk should be seen in a much more positive light as it creates many opportunities; you can't manage risk without knowing the strategy effectively. Strategies need to be descriptive, but prescriptive. Strategy planning is a management practice, and risk management is governance discipline. With a desire to eliminate all risk, you lose all the opportunities. Strategy is more than risk management, it is really identifying what it is you want to do and how you want to do it.

The C-levels should present the strategy to the BoD for oversight approval before implementing it in order to improve strategy management effectiveness. Because without effective strategy oversight and good risk management, the opportunities which it creates cannot be properly transferred into value. Regardless of what type of mind you have, set good policies to encourage good risk attitude and behaviors; deepen understanding of potential risk, collect more information on risk culture assessment, automate and optimize important processes to eliminate unnecessary risks and enable strategy management.

It is a strategic imperative for improving talent risk management holistically: People are the center of the organization. Managing talent becomes crucial for improving business competency. Risks associated with talent are continuing to rise on the radar. To look forward, today’s talent managers must address a much broader array of talent risks, taking into account a critical need to craft a solid talent strategy that supports business objectives and capital investments.

The talent capacity risk is upon how an organization is able to create and maintain the size, scale and shape of the workforce needed to execute business strategy seamlessly. Reputation risk affects talent management effectiveness. It’s important for organizations to build an employment brand; develop talent communities/pools; identify the talent bench strength and weakness; forecast talent management capability & capacity, manage costs, Current and former employees freely exchange opinions about their workplaces, which can affect the ability of the organization to retain existing talent or recruit top talent and improve corporate reputation risk management effectiveness.

Legal, regulation risks need to be managed systematically for improving business resilience and GRC discipline: There is a myriad of information, conflicting, disrupting; and the complexity of industry regulation, compliance. Regulatory risk is often related to employee behavior, regulations, and business laws, etc; lack of risk awareness creates more blind spots uncovered and gaps unfilled. So the management needs to ponder: Can you predict or manage risks, can you deal with uncertainty? Where there is a risk, you want to investigate this early and find out whether or not it can be addressed and manage it adequately, in order to turn around the situation and improve business resilience.

Generic risk management includes how organizations manage technical, economic, legal, political, social and reputation risks, etc. In order to improve risk intelligence, business management needs to define organizational risk appetite and risk attitude so they know the business tolerance of their enterprise for the resulting downsides risks; make more accurate predictions about upside risks for improving business performance; build the resilience muscle for potential reputation or regulatory risks.

The primary focus of risk management would be to identify and control those risks that can be addressed, and deal with “VUCA” reality effectively. It’s important to shift mentality from “risk-avoidance” to “risk management” and risk intelligence; take the creative side of risk management for new initiatives; not only to identify and address key risks but also to understand and convert the best of them to opportunity, and take an integral approach to manage risk smoothly.

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