What are the best ways to create a transparent and accountable risk management framework?

At a surface level, risk should be viewed as an inhibitor to efficiency, not success. If risk is not taken, success is almost certainly zero. To be successful, one should take risks that are calculated within your risk tolerance zone.

"The best way to predict the future is to create it." - Peter Drucker 3 Questions to Ask on this: How can we ensure transparency in our risk management framework, and what steps can we take to make it more accessible to all stakeholders? What are the key components of an accountable risk management framework, and how can we establish clear responsibilities and ownership? Can you share examples of organizations that have successfully implemented transparent and accountable risk management frameworks, and what lessons can we learn from their experiences?

In order to assess a risk, three variables need to be taken into consideration: 1. The SEVERITY (S) of the impact this risk may have to your business; 2. The PROBABILITY (P) of happening; 3. The effectiveness of MITIGATION (M) tools you may apply to reduce the above variables. Therefore, we can think of a "Risk Index" defined as below: Risk Index = S * P / M This framework may help you understand and eventually rank your risks.

Risk appetite should not be set in stone but be reviewed and updated annually, at a minimum, or more frequently with changes in business strategy, risk capacity, and operating environment.

Identifying risks, analyzing their impact, evaluating mitigation strategies, and implementing controls are essential components of risk management. Transparency and data sharing are not only ethical practices but also crucial for business success. The four pillars of risk management are: 1. Identifying and assessing risks 2. Developing and implementing risk mitigation strategies 3. Monitoring and evaluating the effectiveness of risk mitigation strategies 4. Communicating risk information to stakeholders The National Institute of Standards and Technology (NIST) Risk Management Framework (RMF) is a common IT risk management framework used by organizations to manage IT risks.

Establishing clear roles and responsibilities within a team or committee is crucial for ensuring efficiency, accountability, and effective collaboration.

I completely agree that defining roles and responsibilities is a critical aspect of effective risk management. This helps to improve accountability and streamline the risk mitigation process. Moreover, it helps in the allocation of resources and ensures a coordinated approach, reducing the likelihood of overlooked risks and uncoordinated responses. However, it's essential to regularly review and adapt these roles to changing organizational needs and evolving risk landscapes.

Timelines / target dates are essential to ensure traction. Defining the who, what and when of each risk will enable continual progress on each identified risk. Many risks will require immediate, mid-term and long-term actions, so identifying these upfront so they are clear for all stakeholders will help minimise surprises for those involved while demonstrating active progress towards the risk being fully addressed.

Based on my experience as a GCRO : 1. Establish clear roles and responsibilities for risk management. 2. Define who is responsible for identifying, assessing, treating, monitoring, and reporting risks. 3. Specify how risk management activities are coordinated and integrated. 4. Ensure that everyone knows what is expected of them and how they contribute. 5. Avoid confusion, duplication, or gaps in risk management.

Project management remains a largely polarizing topic. Some companies integrate it within projects, facilitating efficiency but also leading to burnout, and others outsource it or have it in a specific department, leading to potentially arduous tasks for operational and strategic leaders within the group. It is a necessary evil because reporting metrics is the only way to make anyone believe you are doing a "good job".

?? Implement a risk register and dashboard ?? ?? 1. Visibility and accountability: A risk register and dashboard provide a comprehensive and consistent view of your organization's risks, which improves visibility and accountability across the organization. ?? 2. Communication and reporting: The risk register and dashboard can be used to communicate and report on risk management to your team, stakeholders, and external parties. ?? 3. Decision-making: The risk register and dashboard can be used to make informed decisions about risk management, such as allocating resources, prioritizing risks, and implementing mitigation strategies.

Managing risks in any organization is a crucial task that requires a systematic approach. One such approach is to maintain a risk register and dashboard. A risk register helps categorize and monitor risks methodically, making it easier to prioritize and address them. On the other hand, a dashboard serves as a visualization tool that provides a quick overview of an organization's risk landscape, enabling informed decision-making. However, it is crucial to ensure data accuracy and timely updates to maintain the effectiveness of these tools. Regularly sharing this information with stakeholders can promote transparency and proactive risk management throughout the organization.

Risk register has been a pivotal part of my product journey. Setting up a risk tracker can let you be prepared to manage them. When other members see them, they add their inputs on how i can tackle them and that's great way. It allows me to not worry when that risk arises as I can see what steps others took when they faced it and I can take the same.

En mi experiencia y práctica de Six Sigma aprendí a utilizar uno de los mejores herramientas que hay para este reto la administración de riesgos el AMEF análisis de modos y efectos de las fallas, es un extraordinario ejercicio para la identificación de riesgos aún siendo muy peque?os en su impacto y que pueden ser perfectamente prevenibles y no nada más los riesgos catastróficos.

Review & update your risk management framework, here are my tips: 1. Regularly evaluate your risk management process, policies, tools, and outcomes. 2. Monitor internal/external changes that may affect your risks/opportunities. 3. Identify and address gaps/weaknesses/issues in your risk management practice. 4. Ensure your framework reflects your current situation and needs.

The COVID-19 pandemic emphasized the importance of ongoing updates in various sectors. Organizations with robust business continuity plans in place prior to the pandemic outperformed those that had not revisited and tested their plans in years. This illustrates how maintaining an up-to-date risk management framework is vital for mitigating unforeseen risks. In essence, consistent framework evaluation and adaptation is a cornerstone of effective risk management.

I think, Risk management is not a static process. it evolves with changes in the business environment and emerging risks. Regularly reviewing and updating your framework allows you to adapt to new challenges, refine risk mitigation strategies, and ensure the framework remains relevant and effective.

That is so true. But i guess its true in all the field. To be relevent. Updating risk framework allows you to be on top of everything, you are full control and no time will be wasted whenever some new obstacles arises. Reviewing it allows you to revise the framework so it is full proof and no one has to be surprised.

Once, I had an open forum regarding a new project, with very high risk tolerance and one with a polarizingly low risk tolerance (i.e., pushback on everything). The high risk tolerance project was under red alert, "Do anything you can" we were told, "just get this moving." The risks we took were calculated, sometimes misconstrued, and logical, leading to a surge in growth. The low risk tolerance project is also going well, having had the risk tolerance broken down earlier in the process. This is a lower priority project, but getting the process down tightly will allow for higher risk projects in the future.

As a Chief Risk Officer and Lecturer , here are some of the key reasons why promoting a risk-aware culture is so important for organizations: 1. Improved risk management decision-making: Employees who are more aware of risks are better equipped to make informed decisions that minimize those risks. 2. Reduced likelihood of incidents and accidents: A risk-aware culture can help to identify and mitigate potential risks before they lead to incidents or accidents. 3. Enhanced compliance: By being more aware of risks, organizations can better comply with relevant regulations and standards. 4. Improved resilience: A risk-aware culture can help organizations to better respond to and recover from unexpected events. 5. Increased innovation...

Culture is one of the critical elements of a work environment. It directly has a bearing on the success and efficiency of the overall company’s risk management framework. Most companies have a risk management process supported with policies and periodic trainings,in my experience this clearly was just not enough. The appropriate term is”educate”. The stakeholders need to be educated on the risks associated and the consequences of their actions.Many stakeholders consider the process time consuming thereby failing to understand and effectively utilize the results of such risk assessments. Risk management should not be considered only as an ancillary function that may hinder deliverables but rather as a driver to making smart decisions.

Well, from another point of view, think of culture as management's power to influence, understand functions and change behaviors. Let's proceed to modify our culture to achieve benefits and face the complexity of human behavior and adapt to new challenges to compensate, such as the challenge of defining new control policies to follow the evolution and development of technology and new jurisprudence that they follow.

Without the involvement and/or proper training of the team, organizations risk having teams that do not fully understand their roles in risk management, leading to less trust, commitment and accountability in the risk management process.

I agreed, however to some degree, we can also create a more efficient way of getting everyone of the company to participate. Eg, after each monthly board meeting , department head such as the finance, business development, technology, marketing and sales, operation team can each get the members in their team to spot the unspotted human risk and issue that might surface unknowingly. Each member that post the problem and come up with the solution, shall be then rewarded. In this way, there is a more positive attitude and effect in dealing risk management at all time in a company.

In my experience, continuous improvement and evolution of the product can be achieved through an effective risk management strategy. This involves gathering and analyzing feedback and data to refine our approach. By learning from past challenges, we can identify growth opportunities. Sharing and applying insights improves our problem-solving skills and enhances overall performance. It is important to have an adaptive approach to stay ahead in a constantly evolving business landscape, aligning our risk management framework with our changing needs and objectives. This cycle of learning and adaptation fosters risk awareness, competence, and confidence, ultimately leading us toward more resilient and successful endeavors.

I've learned risk management is always evolving, hence, making time to reflect on what went well and what didn't is crucial for improving accountability. Review past issues, risks taken, mitigations tried to see what worked and what didn't. Identify gaps in the framework that need addressing. By continuously learning and making changes based on experience, you strengthen risk oversight and decision-making.

To conclude, in creating a transparent and accountable risk management framework, the final step is learning from your experiences: Feedback Collection: Gather data and feedback from your risk management activities and their outcomes. Data Analysis: Analyze this information to gain valuable insights and lessons. Application: Apply the knowledge and insights gained to enhance problem-solving skills and performance. Continuous Improvement: By learning from your risk management experiences, you boost risk awareness, competence, and confidence. Adapt and refine your risk management framework to align with evolving needs and goals.

From a personal perspective, I've found that learning from my own risk management experiences has been invaluable. It's not just a step in a process; it's a constant journey of improvement. When I take the time to reflect on past risks, whether they led to success or challenges, I can gather insights that help me make better decisions in the future. It's like having a collection of lessons learned that I can refer to. These lessons give me a greater sense of control and confidence in handling risks. They also serve a reminder that risk management is not a one-time thing; it's an ongoing commitment to evolving and adapting. This process has, over time, made me more resilient and better equipped to navigate uncertainties and achieve goals.

In my experience, taking some risk also part of the risk management process. Sometimes it is okay to go beyond calculated risk.

An important factor in the risk assessment process is “Likelihood”. The possibility of an event occurring needs to be considered. The determination of “Likelihood” should be assessed based on historical data and risk weighted on the basis of consequence and institutional risk appetite.

Lastly, don't forget to establish mechanisms for continuous improvement in risk management practices, ensuring that lessons learned from past incidents or near misses are integrated into future risk strategies.

In my professional perspective when developing a proper Risk Management Framework, at a minimum, the following shall be carefully addressed: 1. Establish a Risk Management Committee 2. Conduct Risk Assessment 3. Develop SOPs 4. Implement Risk Mitigation Measures 5. Develop a culture of Collaboration and Information Sharing 6. Perform regular Audits and Evaluations 7. Train Personnel 8. Communicate and Educate

In agreement with Derek Benjamin's comment, we do what we call scenario planning. In this situation we plot a matrix that shows likelihood high to low on the x axis and the impact of such an event from high to low on the y axis. We then plot risk events based on these 2 factors and plan based on the high risk high likelihood items

I believe “Risk Management” get better with longevity of one’s experience, discipline and unshakable psychology. As a trader It was very difficult for me to implement a well risk management to my work flow until I do the boring work of backtesting years of historical data which gave birth to me having a well refined edge to believe and stick with. With this, Implementing risk management was smooth and it totally change me from a trader to a “profitable” Trader.