Executive summary
Complex risk and shifting operating priorities have dialed up the need for a strategic approach to risk management.
An optimised risk team is arguably better positioned to demonstrate its value and alignment to functional leaders and executive/board objectives, while shifting the perception of the risk function from cost center to growth enabler. In some cases this shift can be a game changer, triggering broader operating efficiencies and productivity benefits.
Getting closer to the risks inside and outside the business enable businesses of all shapes, industries and sizes to navigate a more complex trading environment — so does being clearer on priorities and coordinating with risk mitigation.
Although there is no one-size-fits-all solution that provides an optimal risk management function design, a cross-team and collaborative approach to assess risks from multiple angles can be beneficial.
Insights
- The pandemic tested how people view risk, providing a valuable test of resilience and preparedness. It was a pivotal moment across all industries and sectors.
- While businesses may be risk aware and embrace the need to prioritise risks, the approach may not be where it needs to be, often due to resourcing issues.
- Best-practice risk management comes from having a wide and connected view, removing siloes and working across the business. This approach provides a holistic view of a specific risk, including its gravity and priority.
- Risk and opportunity are essentially two sides of the same coin. Designing a risk management function takes into account structure, enablement and focus.
- Having the right brains and technical skills around the table is central to optimal risk function design.
- Operating models should ideally offer built-in flexibility to evolve capability in line with prevailing risk exposure and the ability to right-size the risk function to align with business objectives.
Originally published March 2024
