How can you fix common risk governance gaps?

Navigating risk governance requires more than just procedure; it demands a synchronized understanding across all echelons of an organization. In my tenure, misalignment has often been the Achilles' heel, causing not just operational hiccups but strategic derailments. Bridging this necessitates a risk governance fabric deeply interwoven with the organization's ethos and objectives. It’s imperative to lay out clear markers – risk appetite, roles, and escalation paths. But the keystone? Open dialogue. Regular, candid conversations across hierarchies eliminate ambiguity, fostering a unified approach. It’s about ensuring every decision, big or small, echoes the organization’s risk pulse.

?? As a professional risk expert, I believe that the following are the 7 best tools, techniques, and solutions to address the risk governance gap of lack of alignment:?? 1.Align the risk strategy with the organizational strategy. 2.Clearly communicate the risk appetite and tolerance levels. 3.Define risk roles and responsibilities. 4.Establish risk reporting and escalation mechanisms. 5.Ensure that risk information is relevant, timely, and accurate. 6.Conduct regular risk assessments and reviews. 7.Provide training and awareness on risk management to all staff. ??? By implementing these tools, techniques, and solutions, organizations can improve risk alignment and governance, and reduce the likelihood of risk events occurring.

The other common gap is lack of coverage across your material risk types. Has the business conducted an analysis to ensure it has full coverage across all its risk types? Many organisations have governance committees and their material risks identified but the task of confirming there are committed and sub-committees to discuss these risks is often completed. Full coverage of all risk types across all risk governance framework is a must.

To address common risk governance gaps in business administration, organizations should prioritize a comprehensive approach. This involves regularly updating risk management policies to align with industry standards and regulatory changes. Implementing robust communication channels across all levels ensures a shared understanding of risks. Continuous training programs empower employees to recognize and mitigate potential threats. Utilizing advanced technology for real-time monitoring enhances risk identification and response capabilities. Establishing clear accountability structures and conducting regular risk assessments contribute to a proactive risk governance framework.

Some ways to address risk governance gaps are 1) Top -down emphasis of risk management by the CEO and senior management. Also, while safety is a common company value especially among commodities companies, risk management isn't. Having it as a value helps set the tone of a risk culture. 2)Training: It is highly possible that staff (especially front-office-trading and operations are not trained adequately or have questions but don't want to/bother to ask. So having regular training and feedback to solidify understanding is crucial. 3) Accountability: A clear matrix of roles and responsibilities need to be in place to give flesh to a risk framework. Also the consequences/actions when risk failures/excessions happen.

A robust risk management system isn't merely about checkboxes; it's the bedrock of strategic foresight in dynamic landscapes. From my lens, the glaring issue often isn't the lack of system but the dearth of adept hands to steer it. Elevating this necessitates an investment in our most valued asset: human capital. Assembling a cadre of skilled risk professionals, fortified with the right tools and real-time data, is a key. But, there's more. Seamlessly knitting risk management into the very DNA of the organization ensures we're not just reacting but proactively strategizing. Dedicate resources, celebrate exemplary risk practices, and above all, align it with business visions. That's the blueprint.

?? Why these tools, techniques, and solutions are important? Risk management is essential for any organization that wants to achieve its objectives and protect its assets. By implementing a comprehensive risk management system, organizations can identify, assess, mitigate, and monitor risks more effectively. This can help them to avoid costly surprises and make better decisions. ?? Conclusion: Insufficient skills and resources can be a major barrier to effective risk management. By investing in developing and retaining competent risk professionals, providing them with the necessary tools and support, and integrating risk management into the core processes and functions of the organization, organizations can overcome this gap.

Risk leadership is not ubiquitous. It is important to identify and recruit strong risk leaders and to have an appropriate structure to support risk management in an organisation. Ultimately the tone though is set from the top and without buy-in from Board and Executives you will never have the skills and resources for effective risk management.

Leveraging my 8+ years of experience in risk management, I adeptly address common risk governance gaps by implementing robust risk identification processes, enhancing communication channels, and fostering a risk-aware culture within the organization. Through strategic alignment with business objectives, continuous monitoring, and proactive risk mitigation strategies, I work to bridge gaps, ensuring a resilient risk governance framework.

As a professional risk expert, I can say that a weak risk culture is one of the biggest threats to an organization's success. When employees don't understand, care about, or take responsibility for managing risks, it can lead to serious problems, such as financial losses, reputational damage, and even regulatory sanctions. Here are 5 best solutions to weak risk culture: 1. Foster a positive and proactive risk culture. 2. Promote risk transparency, accountability, and collaboration. 3. Encourage risk innovation, experimentation, and learning from failures. 4. Embed risk management into the organizational values, behaviors, and incentives. 5. Assess the organization's risk culture regularly.

Risk culture is the thread that sows risk management into the fabric of the organisation. Without it, there is no risk management. It's not just tone from the top but also feedback and activity from the bottom, and coordination, input and output from the middle. Clear objectives, individual & team accountability, necessary tools, and the right vision are needed.

Fostering strong risk culture and awareness starts from the top or commonly referred to in risk management circles as, “tone from the top”. First step is establishing this and then leveraging it across the organisation. We all follow leaders and if our leaders have poor perceptions of risk management a strong risk culture will never be established.

I would say weak risk culture is the first and main gap. Without a strong risk culture gaps cannot be identified let alone addressed effectively. This is why a plethora of frameworks begin with "what does your control environment / culture / tone at the top / looks like"?

The first step is to get a good understanding of why there is a weak risk culture. There are often numerous factors which require a multi dimensional approach to transforming a weak risk culture into a strong one . Once the factors are identified, there is a foundation to build on. It requires persistence , and a mindset to facilitate positive changes. A very important tenet of safety culture , is to build rapport at all levels of the organisation , and continue to build these relationships in order to work as one towards a safety culture. This is through active engagement , listening and being approachable where safety concerns arise and require reporting which in turn allows threats to safety to be identified before an incident occurs.

Risk management is a journey with no end destination. It is an ongoing process and risk oversight is a fundamental part of that journey. Assurance, review, challenge and monitoring are critical elements of risk governance defined as oversight.

Navigating organizations, I've observed that insufficient risk oversight often lingers beneath the surface, poised to disrupt. Strengthening it means championing entities like a board risk committee or a chief risk officer, ensuring they're robustly equipped and unhindered. But that's just half the battle; external eyes—regulators, consultants—add invaluable layers of perspective. Together, they form an indomitable frontline, ensuring risks aren't just spotted but skillfully navigated. Effective risk governance isn't a checkbox; it's proactive orchestration.

Best Solutions for Inadequate Risk Oversight: 1. Ensure the risk oversight function has the appropriate authority, resources, and access to information. 2. Ensure the risk oversight function can provide constructive challenge and advice to risk owners and managers. 3. Leverage external sources of risk oversight, such as regulators, auditors, or consultants. 4. Conduct periodic risk audits and assessments to ensure that the risk management system is effective. My Opinion: Inadequate risk oversight is a serious governance gap that can lead to significant losses and reputational damage. By implementing the solutions outlined above, organizations can improve their risk oversight capabilities and reduce the likelihood of risk oversight failures

Risk oversight typcially comes from 3 things: 1) Lack of accountability 2) assuming an other team/function has it covered 3) Duplication of services and purpose that provide no actual value. Solve these across the 3 lines and you should solve this problem.

Selecting the right risk structure for your organisation is dependant on the size and complexity. The two most common structures in risk management are a Three Lines Model and a Risk Champion Model. Both have merits and it is worth completing an activity to weigh up the pros and cons of each prior to implementing. There even may be benefit in introducing a hybrid model. Ultimately it depends on the needs and motivations of your organisation and how you want oversight delivered.

Ultimately strong risk governance comes down to: -having full coverage across all risk types -solid committee governance -delegated authority and decision making occurs at the right level and in a timely manner -supported by a strong risk culture which “does the right thing”

Internal and external horizon scanning plays a vital role in not only keeping on top of changing requirements and best practice standards but also facilitating an internal collaboration and dialogue in capturing new emerging risk and understanding potential impact in relation to the 'bigger picture'. The engagement levels across the organisation and the integration of risk teams within the business structure as well as appropriate positioning supports a more organic delivery of the program.

- Assess where the gaps are through benchmarking, questionnaires, management discussions, etc. - Develop a roadmap to bridge the gaps, including people development, tools, raising awareness, monitoring, etc. - Get management and stakeholder buy-in through presentation of the benefits, prior to implementation to get traction on the initiatives. - Build a team to champion the initiatives, raise awareness, monitor results and make adjustments in the future.