Risk lens - Four shades to look through

Lots of jargon and concepts practically not applied in our day to day decisions have made people run away from the topic of Enterprise Risk Management rather than come closer. We as humans are more inclined to absorb when things come naturally and this is a humble effort in that direction.

There are four dimensions in which we deal and interact with risk on a daily basis. In order to help businesses achieve their objectives it is important that we ask the right questions to handle the respective situation.Below is the illustration with examples

1- Risk of Being Too Aggressive

Example

Too much spending on product launch
Entering simultaneously into various markets

Questions to be addressed

What’s the worst that can happen
Are we capable to take the shock
What’s the best and Is it worth going for the best

2- Risk of being passive

Example

Not foreseeing what’s coming ahead in the market
Slow to understanding changes in customers behaviors

Questions to be addressed

Does organization culture penalize to fail?
Target setting process; does that keep people in their comfort zone
Hiring process for top executives. What are the attributes we are looking for?

3- Risk of being complacent

Example

Customer data leakage
Penalties from regulators
Incorrect financial reporting
Delays in projects

Questions to be addressed

How the culture of “doing the right thing “is embedded
Are business objectives only about “increasing sales”, “reducing costs” month on month, quarter on quarter.
Is there a comprehensive framework of objectives established when a new product is launched, investment is made, employee is hired, vendor is taken on board, activities are outsourced, procurement is made, products are sold, etc
Are risks and controls against the objectives are defined.
Are responsibilities assigned for
executing the controls.