To grow corporate valuation in this economic environment.
Emphasizing the right actions begins with distinctions:
- First, a distinction between 1) the practical, daily affect of risk to business strategy, products and operations that then affects business performance objectives (measured in operational terms with their financial and reputation consequences) and 2) “operational risk” as a Basel construct around compliance and reporting.
- Second, a distinction between managing each of these with 1) forward-looking tools of the strategy, product, operations and management accounting disciplines and 2) primarily backward-looking tools of the compliance, control and financial reporting audit disciplines.
- Third, these distinctions influence the design of both the program to manage risk and the actual management of risk. In particular, in the selection of people skills (training and past roles) and personalities.
This enables a focus on:
- Managing risk to business performance by better managing risk in decision processes and individual decisions -- both frequent (daily activities) and infrequent (investments or emergency response)
- Strategy, product, process and IT-related risk because they are the causes behind much of what is counted as market or credit risk.
- Focusing on systems and causes instead of “loss events”
- Identifying and overcoming the three catalysts of risk – change, complexity and fatigue
- Managing risk must be simple in order to use it daily in a dynamic world. Complex risk management programs on top of daily complexity and change increases risk.
- Improving efficiency and effectiveness through performance-driven approaches to managing risk that draw on decades of proven practice in strategy, operations, finance and organizational change, rather than compliance/control-based approaches that -- outside of limited situations -- increase risk, provide a false sense of security and waste resources.
In a specific situation, appropriate proven practices are delivered though a culture change “wrapper” to foster more sustained change. To engage people this includes:
- Workshop method
- Accelerator widgets
- Conversation clarifiers