Illustraterisks

The more diverse, regulated, and geographically dispersed an organization is or becomes, the more important an integrated risk management needed to improve business agility.

Business ecosystem is dynamic with rapid change and constant disruptions, and risk management has become one of the significant management disciplines to address the changing environment and “VUCA” reality effectively.

There’re a growing number of organizations that have shifted their risk management orientation from bottom-up to top-down, with more senior management and board involvement, to take charge with risk issues. The efforts on managing risk holistically or in a more integrated fashion are critical for the long run.

Highly effective risk management is not just about risk controlling, but more advanced as risk intelligence: Management puts emphasis on risk management to risk intelligence transformation. Top management commitment is important to integrate risk management into the enterprise’s core decision-making processes with the proactive risk management scenario, and build risk awareness culture effectively. In order to build a risk-aware culture and improve business risk management maturity. Senior leaders with risk intelligence will set good policies to encourage good risk attitude and behaviors; integrate GRC practices to improve business responsiveness and adaptability,

Integration of corporate risk management into organizational culture is another crucial aspect of running a risk intelligence organization. Do people need to be forced to comply with risk management activity or do they naturally consider it as part of their daily work? It is critical to encourage forward-thinking, creativity, take the right balance of opportunities and risks, individualism and unification; engage with people at every opportunity, and remind them of potential risks. Over a period of time, enterprise risk management programs would be making continuous improvement based on the effective feedback-feedforward forward cycle and culture of risk intelligence.

Innovation risks need to be assessed more holistically and managed effectively: Innovation is risky. What could be seen as a fair determinant of taking an innovation initiative is to view innovation as risk and to assess the risk based on projections of success of innovation management. Organizations have limited resources, how to set the right levels of risk appetite and risk tolerance? Besides the quantitative numbers or numerical success indicators, it is important to bring more qualitative information that is crucial to understanding the health and well-being of the firm's innovation efforts.

Normally, organizations evaluate quantitative or qualitative business results generated by innovation efforts that view the organizational objectives holistically with the correct strategy lenses/focus.The major risk overlooked by Risk Practitioners arises from a fundamental misunderstanding of human behavior and human nature, while assessing long-term risks as part of the overall strategy process. The great attitude towards innovation is about taking calculated risks to inspire good innovation initiatives, staying focused, weighing risks and rewards, and discovering better ways to mitigate risks rather than eliminate it.

Reputational risk as part of organizational risk factor needs to be recognized, and managed smoothly: Reputation is part of the personal or business brand. Reputation risk is caused by misinterpretation, misinformation or misbehavior: We should realize that reputation risk starts with the “do's and don'ts” of individuals in a certain context and in a certain situation. High reputation is enhanced by high professionalism. Individuals should be accountable to set a positive tone to communicate effectively, and corporate managers need to become a strong reputation builder of their organization.

The greatest risk will be the business reputation issue that is not being properly identified or managed. People factor is probably the least well-understood part of Reputation Risk Management, but the most challenging part to manage risks. It’s critical to nurture a culture of accountability and respect. High reputation is enhanced by high professionalism, high credibility, high accountability, and high competency.

The more diverse, regulated, and geographically dispersed an organization is or becomes, the more important an integrated risk management needed to improve business agility. Assessing long-term risks is part of the overall strategy process, and keep the organization intact by ensuring business effectiveness and sustainability.

Posted in: GRC