Guide to effective risk management

Organisations need to embrace new opportunities by taking more informed risks and using effective risk management techniques to enhance business resilience

There is no doubt that the third decade of this century has started off amid much uncertainty. While repercussions from the pandemic are still being felt, 2021 has also seen events such as wild fires in California, floods in Europe, Canada’s heat dome, multiple data breaches, cyber frauds and so on. The last two years have also established that all events are interconnected. In many cases events either share the same root cause or share its impact. Due to this interconnectedness, the velocity and persistence of risk have increased manifold.

However risk taking is an integral part of business and value creation. Hence, it’s imperative to have an effective risk management strategy which enables leaders to prioritise their focus and infuse confidence in operations and business processes. Until now, risk has been primarily focussed on avoiding negative outcomes.

While risk management has conventionally focused on the methods and practices of risk assessment, a key element which needs special attention is risk culture. Culture sets the tone for the organisation and defines how an organisation views risks and converts them into opportunities.

Focus on risk culture enables organisations to take concrete actions towards creating awareness and shared understanding of the purpose of the risk management framework. This builds a strong foundation for a successful Enterprise Risk Management (ERM) framework.

Many risk management activities at the enterprise level are influenced by various types of pressures. Some are external such as compliance or regulatory changes. Also, at times, events within the organisation or the industry prompt internal soul searching as to whether existing risk management approaches are adequate. However, senior management needs to take a more proactive stance as their goal is to further develop risk management capabilities into a real competitive advantage based on strategic and economic priorities and growth aspirations. The focus must be on improving business decisions to increase the value of the organisation in a risk-conscious way.

At MBG Corporate Services, we have helped clients design and implement integrated risk management solutions and bring a risk-reward perspective to both strategic decision making and day-to-day operations. Our value-based approach builds a concrete and robust foundation for effective mitigation planning.

Website: www.mbgcorp.com/ae