How to Conduct Effective Strategic Risk Reviews
Most directors and staff describe risk as something negative that happens to an organisation. It’s also described as something that can go wrong, lead to potential losses, and, ultimately, something to both monitor and reduce.
However, in most cases, current risk management procedures do not completely unlock the potential of risk, because monitoring and managing risk can only go so far.
It’s important to shift our mindset and to imagine risk as a strategic advantage, an opportunity with hidden potential, a source of, potentially, amazing innovation.
In this scenario, strategic advantage and significant opportunities can be explored, managed, and monitored as part of the risk management process. From this angle, risk is viewed as an ongoing strategic conversation, rather than a compliance reporting function.
How should you use innovation and strategy to manage risk?
So how should boards and staff identify and manage risk with this new perspective? Well, the strategic conversation should focus on the two following topics:
- What innovative strategies can we implement that will reduce the possibility of the risk occurring, and how can we turn each of these strategies into opportunities and possibly revenue creators?
- What innovative strategies can we implement that will reduce the impact of the risk if it were to occur, and how can we turn each of these strategies into opportunities and possibly revenue creators?
Once your organisation has adapted this new perspective on identifying and approaching risk, then you can begin looking at risk as revenue opportunities that stem from managing the potential and the impact of risk.
Innovation strategy should be synonymous with managing risk, and it should never be for nothing. This means that there should always be questions asked, potentials explored and solutions tested to discover how risk management is creating impact in the future.
BoardPro’s “How to conduct effective strategic risk reviews” whitepaper can help
If your board needs help adjusting its mindset on risk, then BoardPro’s whitepaper, “How to conduct effective strategic risk reviews” will be perfect for you.
This whitepaper dives deeper into how risk could benefit your organisation if you view it as an opportunity with potential for amazing innovation and how the roles of the board and risk intertwine. It also introduces an effective strategic risk review process and walks your board through key consideration points, breaking down responsibilities that the risk committee should focus on as well as senior executives.