Home > Risk > Talking sense about risk and strategy

Talking sense about risk and strategy

I am heartened by the increasing number of articles and publications that are talking sense when it comes to the management of risk.

The latest is a piece in PropertyCasualty360, Where risk meets strategy.

It’s a short piece, but it is worth reading for these and other points:

A reasonable amount of good risk management is better than no risk management, but too much poor risk management hurts an organization by encumbering resources, slowing decision processes and giving leaders—and the board and other stakeholders—a false sense of security.

…the “wish list” from these executive leaders and board members was pretty simple. In essence, they would like the discipline of risk management to focus on two things: one, helping organizations pursue current and planned opportunities in a nimble risk-aware fashion; and two, helping leaders see the big risks around the corner in time to do something meaningful about them, whether avoidance or mitigation, or better crisis management.

Entrepreneurial spirit does not thrive in cultures that are fearful of taking manageable risk, or otherwise mired in paperwork and process.

By the way, when John Fraser of Hydro One was reviewing a draft of my World-Class Management book (he was one of several global risk practitioners and thought leaders who made a huge contribution through their comments), he pointed out that while every decision changes risk, it is very useful to take a periodic snapshot and review the more significant risks to the enterprise. I tend to focus more on the first in my writing (intelligent and informed decision-making), because many organizations limit their risk management activities to the second (a review of a list of risks).

I very much like the point about nimble decision-making, enabled and enhanced by timely and reliable risk information.

What do you like? Or, do you disagree?

  1. Rajarshi Ghosh
    August 23, 2015 at 10:21 PM

    Risk management has to be holistic embracing the basic principles for the optimum output. It must enable the decision making process.

  2. Peter Cross
    December 16, 2015 at 7:10 AM

    Business is about the successful achievement of goals within time constraints, budgets and limitations of an industry. Having worked in both public and private entities the reality of decisions are they are limited to the information in hand and the ability to understand that information at that moment.

    A good risk management process should enhance both those aspects and allow for critical assessment in retrospect to reduce repetition of failures or less than optimal outcomes. They can not nor should management think or believe that they can ever eliminate all risk, remembering that no risk generally means no reward.

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