For many managers, executives and directors, risk is the domain of the risk manager. This is a mistake. In fact, risk management is everyone’s responsibility. If the board, senior managers and all staff are not managing risk, then what are they doing?

Risk management is about creating opportunities. A robust process of procedures and behaviours that align to the risk appetite of an organisation’s senior decision-makers will allow those making decisions to be comfortable with the risks inherent in the opportunities they choose to pursue. This is the positive part of risk management that many executives, directors and risk managers misunderstand. Risk is a threat but the biggest threat from risk management is that people see it as stifling opportunities. Of course, once you understand the risks and the manner in which risk management is executed, then this creates the framework to take opportunities with confidence.

Of course, there are always threats to the organisation. These threats will disrupt your program so that you will not be able to complete your strategic and operational plans.

Why did you not see the threat? Generally it is because you don’t think you can fail. Alternatively, it is because people do not take risk management seriously and sometimes you simply have no control. However, it is most unusual to come across a threat over which you have no control. If you do not accept that you have a capacity to fail and assume all will be well, then you will be surprised when you read about it in the paper or when someone in the company comes to you with the bad news. In most cases the board and executive should have known what this bad news was and the extent to which they can build procedures and behaviours to manage the risk.

Apr-Jun 2014 Issue

Neill Buck & Associates