Consider the global changes we've seen in recent years. Now you'll understand why Risk Resilience has become such a hot boardroom topic. Demographic changes and economic shocks, environmental issues and technological advances. They all represent major risks to your business, whether financial, operational, ethical or reputational. The challenge is to identify the ones you are most vulnerable to and mitigate them effectively.
Types of risk resilience
There are two stages to becoming more resilient to risk:
Identifying emerging risks - all businesses should have a deep understand of all the major risks they are vulnerable to.
Managing risks more effectively - businesses also need to evaluate the effectiveness of their current risk management strategies to ensure they remain robust, relevant and meet the changing needs of regulators.
Getting it right
Strategies for managing emerging risks have never been more vital. Is your business clear about its risk appetite and have you developed an appropriate risk management strategy?
How much time does your Board dedicate to the issue and who in the business is responsible for identifying and mitigating emerging risk?
Once you are clear about the risks you face you will need to be confident that your processes for managing them are effective. So your approach to risk management will need to be embedded in everyday working practices and applied consistently across all operations. Is your risk management process driven predominantly by financial concerns? Have you identified ethical and reputational risks and do you have a strategy for managing them?
Answering these questions, of course, depends on accurate information. And have you got enough of it? Is it up-to-date and will it provide a solid base for sound decisions? If the answer's yes, then the Board will know that risks are well managed and they will be able to use the data to inform business strategy (shaping remuneration policies for example).
It is this level of awareness that builds resilience businesses - organisations that understand the risks they face and can articulate their risk appetite and define their risk strategy accordingly. And that means better decision-making, greater agility and sharper competitive edge.