There are many different reasons risks get missed. Some are simply misunderstood and under-estimated, and some are totally unexpected. Some are the result of deferred decisions and procrastination, and others are the result of board distraction and inattentiveness. Ultimately, according to Garry Honey, predicting the future is a fool’s game as there are only two possible outcomes: lucky or wrong.
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How to sustainably risk manage the sustainability agenda within financial services
The Risk Officer Sustainability Forum (ROSF) has been established to bring together risk and sustainability leaders from across small and medium-sized financial institutions and discuss how they are managing the challenges of managing rapidly developing sustainability risks. At the first roundtable held on 9 June 2021, a group of 15 leaders debated the pros and cons of the different approaches to tackling the question of what a suitable the target operating model could be. In this blog Alex Hindson summarises the discussion, setting out the pros and cons of each model.
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What makes a successful 'regulated leader'?
Drawing on his extensive research, Gary Storer considers the key differentiating behaviours, thinking and drivers of successful leaders in regulated organisations. He identifies three key areas - personal, relational and organisational - in which successful leaders particularly stand out.
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Internal audit - a view from the board
Tim Le Mare argues that the ‘three lines model’ provides a good basis to frame the discussion regarding the board’s assurance needs. He explains that the recent revisions to the model, with an increased focus on collaboration, speaks to the importance of ensuring assurance providers have clear lines of sight and effective working relationships - and he adds that Internal Audit should have a strong voice in shaping the assurance agenda and closing the gap between board level expectations and current practice.
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Operational resilience and the need for effective governance
John Allan explains that the benefits of having clear organisational direction, transparency over roles and responsibilities and better co-ordination across teams are evident, as these lead to better resilience outcomes. This is also reinforced by the regulators who have clear expectations of the board and senior management. He draws on the Investment Association’s recent report, Effective Governance of Operational Resilience, and considers some of the key governance arrangements that should be applied.
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Mind the Gap: cyber security risk in the new normal
In its recent research, the Chartered IIA sought to understand what organisations are doing to manage and mitigate cyber security risk, and what they are doing to promote a cyber security aware culture. Kristina Grinkina explains that the research findings highlight a concerning gap. She explains that, with organisations considering a hybrid way of working beyond the pandemic, a combination of technology and awareness to mitigate human error will be the most effective defence in the new normal.
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Resilience and the impact of leadership
In Control Risks’ recently published ‘2020 Global Resilience Survey’, they highlight some important trends in relation to how global business has been practically implementing their resilience programmes. Their survey highlights that effective leadership is one of the most important resilience principles and, particularly, having a dedicated crisis or continuity leadership really seems to have made a positive outcome when faced with the impact of Covid-19. Andy Cox outlines the survey’s key findings.
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The case for standalone risk committees
Bryan Foss says that evidence suggests that boards rarely put in place a separate risk committee where this is not required by the regulators - but argues that this is starting to change. Issues such as ESG concerns, digital technology transformations, cyber risks and other non-financial drivers are coming to the fore. These and other factors, he concludes, mean standalone board risk committees are likely to become commonplace.
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Value preservation - a boardroom imperative
Sean Lyons explains that organisations have explicitly focused on value creation at a strategic level through their company purpose, strategy, and business model. However, value preservation has rarely been explicitly addressed in the same way even though this can have a major impact on corporate culture and resulting corporate behaviour. He suggests that we are overdue a change in thinking.
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What is the relevance of the rise of ESG to Chief Risk Officers?
As a highly experienced Chief Risk Officer, Alex Hindson comments on the importance of proactively managing an organisation’s brand and reputation, particularly as the risks associated with ESG have been rising inexorably. He highlights the vital role CROs are able to play, given they are one of the few senior executives able to look across the breadth of ESG and sustainability issues.
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Objective-led risk management and oversight: extreme organisational agility in action?
Bryan Foss shares some of his practical experiences from his career as a non-executive director and chair of a risk and audit committee. He says a board-led strategic planning exercise, starting with purpose and objectives, are the key to effective risk governance and oversight.
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The risk that rarely speaks its name
As board members and risk professionals, we rightly focus on the risks that face our organisations. Francis Kean points out that we don’t focus on the risks to ourselves, and asks how well we understand the ways in which our liability insurance protections work and how they will respond in the event of a claim or investigation against us. He provides some practical steps we can take to understand these personal risks.
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Maintaining a dynamic approach to risk
Today’s environment highlights the fact that risks are not standalone and cannot be considered in isolation, argues Tim Copnell. A static approach to risk oversight and risk management, where risk strategy is reviewed a year, is no longer enough. He explains that a more dynamic approach, where risk is continually at the heart of strategic thinking and planning risk, is essential.
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Be prepared
Looking at the course of previous pandemics, Covid-19 has not been so different. As Lord Harris explains, pandemic flu has been in the top tier of the UK’s National Risk Register since it was first published a decade ago, yet it was not assigned with a sufficiently serious level of risk. He argues there needs to be a process of continually learning from experience and using that learning to strengthen the organisation ready for the next crisis – as well as the promotion of better preparedness in the UK for a major crisis or incident.
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Bribery and corruption: a need for continued board vigilance
We’ve recently seen the tenth anniversary of the enactment of the Bribery Act 2010, and Lord David Gold reflects on its success. He says that, rather than reducing British competitiveness as initially feared, it has resulted in companies improving their governance and it has brought them other benefits. He adds that, with the pressures brought by the pandemic, boards must be particularly vigilant in relation to bribery and corruption related risks.
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The challenges to getting objective-centric information
Boards need forward-looking, concise information that addresses the likelihood of the organisation achieving its most important objectives. However, Tim Leech says that there are barriers to achieving this and he sets out the challenges that risk functions and internal audit need to address to support their boards more effectively.
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Ten ways corporate boards need to approach risk in 2021
The WomenCorporateDirectors Foundation recently held two webinars, supported by the Risk Coalition, discussing how boards need to prepare themselves to tackle risk differently in 2021. They note 2020 forced companies to look at risk in new ways, and say that 2021 will be a time for boards to really integrate risk and strategy on a long-term basis. The webinars identified ten ways corporate boards need to approach risk in the year ahead.
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Focusing on Human Capital Risk
Oleg Lebedev sets out the true costs of poor employee health and engagement - significantly exacerbated during the pandemic. He argues that many businesses do not measure or manage human capital risk separately, and are unaware of how much of this risk is carried in their business and how effective the mitigation is - and that boards need to take this risk seriously.
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Defence, risk management and people
When it comes to risk management, Alex Chikhani says there is much that the private sector can learn from Defence. He says that Defence succeeds due to its agility, flexibility, and its ability to be reactive when needed. This means it can build into its capabilities the means to address the widest range and the greatest severity of possible threats. Most importantly, he explains that as Defence increases its diversity of thought, it strengthens its short/medium term risk management abilities.
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Where do risk leaders come from?
Neville Gaunt points out that the Coronavirus pandemic has exposed the frailties of many organisations across the globe and argues that this issue stems from the poor quality of leadership. He says that the roots of this are in our education system that doesn’t teach key skills for leaders - risk, leadership or communication - and he calls for action.
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