The value of risk management to the organisation

Most businesses, most boards, don’t spend a lot of time thinking about uncertainty. In fact, they are terrified of doing so.

The quote is from a good article in Strategic Risk Global about the value of risk management and why many risk managers can’t seem to make a difference in the perception of what they do for the organisation.

[T]o create a more effective relationship between the risk function and the board, risk managers must stand up and show their bosses that they are not mere insurance buyers, as some senior leaders perceive them to be.

There are two problems that many risk managers face. The former they are often ignorant of, and the latter frequently stems from the former:

  1. Their own poor grasp of many facets of risk management. The field is wide and our understanding of it is rapidly improving. Unfortunately many consider their own understanding of risk management to start and end with their knowledge of the applicable regulations.
  2. The image that many risk managers get in organisations is of people worrying about moving dots around on a heatmap. This image is hard to shake off once it takes root.

There is a range of people-reporting risks rather than doing much about them. Risk managers need to up their game. They need to shift their emphasis from planning and strategising to implementation and action.

Indeed. The last thing executives and boards need is more reports. Typically they’re swamped in reports. What they want is a plan of action that has:

  • clearly defined problem
  • roadmap with milestones and deliverables
  • what the success looks like