If we could go back more than 15 years we would have found a business environment where mentioning the word ‘risk’ would have elicited word association responses such as banking, finance and insurances.
Over the past decade the business and risk environment has been changing rapidly and a much broader interpretation is now entering the vocabulary of boards, CEO’s, executives, managers and risk practitioners.
There are two major changes occurring in the current risk landscape, an increase in the number of risk categories and the potential size of risk that has to be managed. These rapid developments are now bringing risk to the forefront of all businesses, large, medium, multi-national and small.
This means that boards and executives now have to develop a refined focus on risk as well as translating strategy into action at middle management and employee levels. The focus on risk and the risk management process is accompanied by an emphasis on how it contributes to protecting the business and enhances value.
Without doubt this is an exciting new way of thinking as there is a reversal from ‘reactionary strategy’ to ‘prevention’ to ‘risk anticipation’ and those companies embracing the concept will be better prepared.
However, it will require a change in the way organisations encourage innovative thinking and the reporting of risk at various levels, especially at shareholders' meetings. Shareholders will want evidence on how well the organisation can adapt and cope with rapidly changing risk categories, environments & severities.
We’ve included some references for you to review and consider.
Economics & culture