How can you enhance your risk oversight function?

Enhancement of risk oversight is usually over complicated by many. However my 2 cents is to always constantly address the ownership quagmire through effectively reminding frontline that they are the first line. There tends to be weak ownership of risk by front-liners and as such creates too much work for second liners who should expend most time providing oversight. So for second liners, solid business acumen is critical as you can’t manage risk effectively for a business your don’t understand. I believe when the foundations of ownership and business comprehension are ticked off, the rest falls in place seamlessly. Before governance, tools and reviews risk ownership is vital. Risk must be viewed as a service!

Enhancing risk oversight in a commodity trading house requires a focus on people, systems, and organizational structure. Recruiting skilled risk professionals and ensuring their ongoing training is essential for understanding and navigating market complexities. Advanced risk management systems are crucial for real-time monitoring and analytics. Organizationally, fostering effective communication between departments and integrating risk insights into trading decisions is key. A risk-aware culture across the organization further strengthens this approach. This combination of expert personnel, sophisticated systems, and a well-structured organization is vital for robust risk management and informed decision-making in commodity trading.

It requires a strategic and proactive approach. First, establish a robust risk management framework, integrating it with your organization's overall strategy. Regularly conduct risk assessments to identify potential threats and opportunities. Foster a culture of risk awareness by training and engaging all employees. Leverage technology and data analytics to monitor and predict risks in real-time. Encourage open communication and transparency, ensuring all stakeholders are informed and involved. Finally, continuously review and update your risk management practices to adapt to new challenges and evolving industry standards. This comprehensive approach will strengthen your organization's resilience and decision-making capabilities.

While assessing the current state is an important aspect, before that another important element is to identify the overall vision, mission and goals to be achieved from the oversight function. This can be done by identifying stakeholder expectations and best in class practices and relevance to the organization and industry. Some times the risk oversight functions are created as a legal requirement without recognising it as a value add function. Hence, it is essential to develop a proper business case with clear ROI to get the sponsorship from the Board and Senior Management

A simple and short answer is build relationships. People buy into people and not process. It genuinely is that simple. Creating good relationships will enable you to gain buy in and traction around the business. This is the core of any good assessment. Having the open dialogue with the business and not holding back on what works, or does not.

The most crucial points referring to risk are understanding it, being able to mitigate it but - at the end of the day - align it with the risk that your trustees want to assume. Because, your role as a fund manager is to produce the optimal returns for the risk assumed; assume no risk and you return nothing more than the risk free. HDBI, being the sovereign fund-of-funds of Greece, has a mission to assume logical risk in order to fuel, sustain and improve the Greek VC/PE ecosystem. HDBI also plays fundamental role in sustainable and ESG investing. We use our mission statement and the guidance of our corporate decision-making and advise-giving bodies to align interests and risks in order to keep ourselves at the desired risk/return point.

Aligning your risk oversight function with organisational strategy is pivotal, as it ensures that the risk management efforts are directly contributing to the achievement of business objectives. This strategic alignment should go beyond mere compliance or box-ticking. It should be about proactive identification and management of risks that could derail the organisation's long-term goals. By explicitly linking risk oversight with the broader business strategy, you establish a coherent narrative around risk that engages senior management and the board. In essence, the risk oversight function becomes a strategic partner in the organisation, rather than an isolated unit.

Proposed enhancements to our risk oversight function will significantly bolster our ability to identify, assess, and mitigate risks effectively. By establishing a clear governance framework, defining risk appetite, and fostering a risk-aware culture, we'll create a solid foundation for managing risks. Regular assessments, scenario analysis, and data analytics will provide us with a proactive approach to risk management, while Key Risk Indicators (KRIs) will serve as early warning signals. Engaging the board, emphasizing crisis management and business continuity, and committing to continuous improvement will further strengthen our resilience in the face of uncertainties.

Let’s get very real and acknowledge that to align with your organisations strategy, you have to have clarity around what the strategy is and what risks link through to it. When we talk about risk management we do have a tendency to leap to detection and mitigation. Some risk functions will a bit more nous will talk about risk prevention, generally in terms of known risk. The more established risk based organisations will loop in emerging risks to a preventative approach. All of these are strong foundations, but the question I will always pose when we are framing our risk management strategy is, what is our risk tolerance? Blanket risk prevention/mitigation is unachievable, really seek to understand what risks can be safely absorbed.

Enhancing the risk oversight function involves establishing a clear governance structure, securing leadership support, nurturing a risk-aware culture, conducting regular assessments, leveraging data analytics, performing stress tests, ensuring regulatory compliance, defining risk appetite, improving reporting, investing in training, managing third-party risks, adopting risk technology, preparing for incidents, continuous improvement, engaging the board, collaborating externally, aligning with strategic planning, crisis preparedness, regular reviews, and feedback mechanisms. These measures collectively bolster risk management and resilience across the organization.

We try to ensure risk management ( identification, current assessment is clearly part of our operating system and data flow - regular risk management FOF a product line and project with IPT and stakeholders - centralized data toolset to identify, status and define actions forward - ensuring risk actions/ mitigations and the when of risk realization are part of our project schedules. Make it part of active progress and action data set ( not a separate list)

Risk Management as a function has been usually seen as an oversight activity and something that creates hurdles for the business's day-to-day operations. However, risk management should be seen as an enabler to the business. If risk management teams are engaged in the stages of the process, it can help eliminate inefficiencies and optimize the change management experience.

Emphasize the importance of seeing the risk oversight function as an integral part of your organizational culture and governance, not a separate activity. Encourage collaboration with finance, compliance, internal audit, and business units to share information on risk management. In a risk-averse approach, stress the need for active involvement in strategic, operational, and project decisions to identify and evaluate associated risks and opportunities.

To enhance your risk oversight function and to integrate it with your organization's operations and decision-making processes, It is critical to establish clear communication channels to create a culture of open and honest communication. The key here is to foster a culture that encourages and embraces open, transparent, and candid communication.

Integration with organizational operations involves embedding risk management protocols seamlessly into daily processes and decision-making frameworks. Establishing cross-functional collaboration ensures that risk considerations are woven into every aspect of operations. Implementing automated risk assessment tools and real-time monitoring systems allows for swift response to emerging risks. Regular training programs can enhance the risk awareness of operational teams. By seamlessly integrating risk management into operations, organizations foster a risk-aware culture, promoting agility and resilience in the face of challenges while ensuring that risk oversight is an intrinsic part of decision-making at all levels.

Leveraging technology isn't just advantageous—it's essential. By automating and optimizing your risk management processes, you gain unparalleled efficiency and accuracy. Imagine a centralized Risk Management Information System (RMIS) that seamlessly integrates data from various sources, providing a comprehensive view of your risk profile. Advanced analytics, artificial intelligence, and machine learning take your risk oversight to the next level. These tools unearth hidden patterns and trends, transforming your data into actionable insights. Embracing technology isn't just about enhancing risk oversight; it's about future-proofing your organization. In this digital age, technology isn't just a tool—it's your competitive edge.

Technology can be used to promote a culture of transparent and truthful communication, and one way to achieve this is by utilizing anonymous feedback tools. By doing so, employees can feel more at ease in reporting potential risks and sharing suggestions for improvements without fear of repercussions or reprisal.

Implementing cutting-edge tools such as artificial intelligence, machine learning, and data analytics automates risk assessment, enabling real-time monitoring and early detection of potential threats. Streamlining workflows through digital platforms enhances efficiency, ensuring timely response to emerging risks. Utilizing risk management software facilitates data-driven decision-making and allows for comprehensive reporting. Moreover, leveraging technology enables the integration of predictive modeling, scenario analysis, and stress testing, empowering organizations to proactively identify and address risks. Technological solutions not only enhances accuracy but also optimizes the overall effectiveness of the risk oversight function.

Technology offers transformative opportunities to amplify our risk oversight: harnessing advanced analytics and predictive modeling for trend detection and impact assessment, deploying AI and blockchain for anomaly detection and data integrity, utilizing integrated platforms and cloud solutions for seamless collaboration and scalability, fortifying cybersecurity measures to counter digital threats, automating reporting through customized systems, and employing virtual reality and natural language processing for immersive training and sentiment analysis. By effectively leveraging these tools, we elevate our risk management, equipping ourselves to proactively identify, assess, and mitigate risks across diverse domains.

Embracing technology is a game-changer in the quest to enhance risk oversight. By harnessing the power of automation and data analytics, organizations can revolutionize their risk management strategies. Utilizing a Risk Management Information System (RMIS) not only centralizes data but also offers a holistic view of risk, enabling smarter decisions. Additionally, cutting-edge tools like artificial intelligence and machine learning empower us to uncover hidden patterns and devise proactive risk mitigation strategies. Embrace technology to supercharge your risk oversight and stay ahead of emerging threats.

It is important to look upward, and develop risk management skills at the Board level. This involves a different set of talent development skills. You can partner with senior management to advocate for risk management skills development training for the board, spend more time with legal and audit committees on specific risk management areas, and support the nominating commitee to recruit experienced risk management talent. Senior risk managers should track the quality of the oversight questions from the board, and should consider whether a lack of rigorous risk management oversight by the board creates procyclical risk.

To foster growth and resilience, cultivating talent involves identifying potential, crafting individual development plans, providing diverse learning opportunities such as training, mentoring, and stretch assignments, emphasizing feedback and performance reviews, enabling cross-functional exposure, instituting leadership development programs, supporting continued education, acknowledging achievements, facilitating networking, instilling a culture of continuous learning, and regularly evaluating progress through key performance indicators. Leading by example further, amplifies the impact of talent development efforts, resulting in engaged and skilled employees who contribute significantly to organizational innovation and success.

The importance of having a trained and competitive manpower cannot be undermined. With the ever changing dynamic risk environment, it is pertinent to develop and upskill the manpower on continuous basis

Developing talent is critical for a robust risk oversight function. This involves investing in training programs to enhance the skills and competencies of risk management professionals. Fostering a culture of continuous learning and staying updated on industry best practices ensures adaptability. Identifying and nurturing leadership qualities within the team contributes to effective risk governance. Additionally, promoting interdisciplinary collaboration cultivates a holistic understanding of organizational risks. By prioritizing talent development, organizations ensure that their teams possess the expertise and agility needed to navigate complex risk landscapes, fortifying the overall risk oversight capabilities.

In addition to developing your talent through training, coaching, and mentoring, it's crucial to establish a robust knowledge-sharing platform within your risk oversight function. Encourage your team to regularly share insights, experiences, and best practices with one another. This collaborative approach will not only enhance their skills but also promote a culture of continuous improvement. Furthermore, consider cross-functional training to broaden their perspectives and understanding of various risk domains. By fostering a learning ecosystem, you empower your team to stay adaptable and responsive to evolving risk landscapes.

Continuous monitoring and improvement are essential for an effective risk oversight function. Regularly assess key performance indicators and metrics to gauge the success of risk management strategies. Analyze past incidents and learn from them to enhance future response capabilities. Foster a feedback loop involving stakeholders, enabling insights for refinement. Stay attuned to industry developments and emerging risks, adjusting strategies accordingly. By maintaining a proactive stance on monitoring and improvement, organizations ensure that their risk oversight function evolves dynamically, staying resilient and effective in the face of ever-changing risk landscapes.

Enhancing risk oversight function in an ongoing process. It requires commitment from top down and willingness to adapt to changing circumstances and emerging risks. Apply consistency in the following - Governance Structure- clarity of roles and responsibilities, risk appetite-link to objectives & risk-aware culture, Regular Risk assessment -use of tools: -risk registers and risk heat maps to track and prioritize risks. Put a scheme for monitoring, reporting, updating, regulatory compliance, leverage on Data Analytics and technology, conduct risk drills to develop resilience, strong internal controls, trainings, Use of REX, feedback mechanisms to report potential risks and develop Key Risk Indicators and track Key Risk Indicators

The monitoring across the testing should be considering the criticality in every risk (low, medium and high), in order to determine the frecuency. Then it′s going to be important to establish monitoring tools like "test" or KRIs (Key Risk Indicators) or a mix of both. In my opinion when you review an AML or accounting topic no only use one technique.

Establish Key Risk Indicators (KRIs): Define and monitor key risk indicators relevant to your organization's risk profile. Regularly Review Risk Reports: Schedule frequent reviews of risk reports for continuous monitoring and adjustment. Conduct Periodic Risk Oversight Audits: Implement regular audits of the risk oversight process to identify areas for improvement. Utilize Feedback Loops: Establish feedback mechanisms to learn from past risk events and improve future risk management strategies. Benchmark Against Industry Standards: Invest in Ongoing Training: Leverage Technology for Enhanced Analysis: Use advanced analytics and data visualization tools for deeper insights and better performance tracking.

In addition to continuous monitoring and identification of risks as pointed out by others, the right personnel with required skills and knowledge are needed. These personnel must understand the business environment of their respective organisations. They must be highly IT inclined and guided by ethical values.

To truly add value to your risk oversight function...stop thinking of yourself as overseeing. Be curious, have a perspective, be someone people seek out because they recognise your value. If you can do this you will be invited into the organisation rather than operating on the periphery of it and also be able to offer much deeper risk related insights, challenge and overall 'risk oversight'. I appreciate some people will feel that you can't do this and provide risk 'oversight'...on that we will have to agree to disagree.

One area to be considered is creating Risk Awareness and right Culture, among the Management and the Board, so they are sensitised to Risks while making decisions and the risk integration with Strategy and Operations can happened.

Risk management is oversight can be enhanced through building an effective Risk culture in the organisation.Oversight of risk management can not only the be the responsibility of the risk function, its when every individual in the organisation ,their values,beliefs, their actions and decision making is based on risk management principles. It's when everyone desires to do the right thing everytime.

Strategic, tactical, and operational planning may contribute to the foundation of risk governance in an organization. Establishing clear objective statement(s) can aid in supporting oversight activities. A clear target needs to be identified for stakeholders to benchmark their performance against. SMART principles may be useful in determining the objectives. Any deviations from these targets can then be identified as practical or a cause for alarm.

If you really want to live risk management and thus avoid risks, you have to find the right managers who can also recognize and assess the risks, make the remuneration of these managers dependent on factors other than turnover and profitability and, last but not least, have confidence in these people.