Why You Must Take A Strategic Approach To Risk Management — William E. Oliver
“Managing risk can only be successful it it’s in every phase of your systems, policies and processes.”- Sudhir Kondisetty
Over the past decade, several large-scale events have hit the world. Recently, being the Covid-19 pandemic. Its continuing negative and continuing crippling effects can still be seen in the corporate world. This has shown the importance of having a strategic approach to risk management at all levels in an organization.
Recently, I read an article published by Forbes titled “Why You Must Take A Strategic Approach To Risk Management”. Having an extensive experience in corporate risk strategy, this article greatly resonated with me. It discusses three strategic approaches to risk management. These include -
- Strategic approach to risk management
“Strategy is about the creation and allocation of resources to the right place in the right way at the right time over time”
Companies must adopt an observe-assess-plan-act-observe cycle. Risks are mainly around the Five Cs (Conditions, Customers,Competitors, Collaborators and Capabilites) of an organization. Organizations should pay attention to looking for changes in these factors and not overlook the early warning signs of risks. It is crucial to assess and understand risks and their implications. Only then can an effective and informed plan be made and executed to address these risks.
2. Clarify roles
These are different levels in an organization. All have different roles to play when it comes to risk management. For example, the board is responsible for setting policies and ensuring the organization has the capabilities for risk management.
3. Act appropriately depending upon the threat
Threats are not all equal, some are major and some minor. Plans made should be depending upon the threat posed by the risks.
“Something that damages things above the waterline would be a minor risk. Something that puts a hole in the board below the waterline and can sink the boat (or organization) is major.”
Read the full article here.
