Magazine article Risk Management

Step Up to the Challenge. (Executive Forum)

Magazine article Risk Management

Step Up to the Challenge. (Executive Forum)

Article excerpt

As risk management practitioners debate the concepts of enterprisewide risk management and the role of the chief risk officer, perhaps we have over-looked a key element to our profession: the importance of applying the right risk management technique to the appropriate situation.

Each organization has unique characteristics that determine which systems and tools work best in making them successful. The key to maximizing this match is evaluating how an organization will accomplish the following four key objectives:

1. Identifying significant risks to the entity

2. Assessing and measuring those risks

3. Treating the identified risks

4. Monitoring the risks

Led by a risk management professional who owns the risk management processes, all key functions of the organization must take part in those four objectives. Of course, the more complex an organization is, the greater the number of individuals involved will have to be. In such situations, bureaucratic constraint is an additional risk, which means the group must focus on simplicity and flexibility.

The output created by such an organizational effort will supply management and governance with relevant information in their efforts to understand the depth and breadth of the risks. …

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