Are your risk governance processes meeting standards?

1 Benefits of strong risk governance

Strong risk governance can help your organization in several ways, such as enhancing strategic decision-making and aligning your risk appetite with objectives and values. It can also improve risk culture and awareness among stakeholders and employees, while reducing exposure to potential losses, reputational damage, and regulatory sanctions. Additionally, it can increase your resilience and agility in responding to emerging risks and opportunities, as well as creating value and competitive advantage by optimizing risk-return trade-offs.

2 Challenges of weak risk governance

Weak risk governance can expose you to various challenges and risks, such as failing to identify and prioritize the most critical risks, lacking a consistent approach to risk assessment and management, having gaps or overlaps in risk roles and responsibilities, having ineffective risk policies and procedures, and having poor or delayed risk reporting and communication. All of these issues can lead to non-compliance, inefficiency, errors, missed or inaccurate information, lack of transparency, or loss of trust.

3 Key questions to assess your risk governance

To assess your risk governance processes, you can ask yourself some key questions. For example, do you have a documented risk governance framework that outlines your risk vision, strategy, appetite, and principles? Is there a dedicated and competent risk function that provides independent oversight, guidance, and support to risk owners and committees? Additionally, do you have a regular and structured risk identification and assessment process that covers all types of risks and considers both internal and external factors? Moreover, is there a risk management process that defines your risk responses, actions, and controls with assigned accountabilities and timelines? Finally, is there a risk monitoring and reporting process that tracks your risk performance, compliance, and incidents while providing timely information to stakeholders?

4 Indicators to measure your risk governance

To measure your risk governance processes, you can use indicators such as the level of alignment between your risk governance and business strategy, the frequency and quality of your risk reporting, the degree of involvement of risk owners and committees, the number and severity of risk incidents, breaches, and losses, and the feedback and satisfaction of stakeholders and employees. These indicators can help you determine how well your risk governance processes are functioning.

5 Tips to improve your risk governance

To strengthen your risk governance processes, you should review and update your risk governance framework regularly to reflect your current and future risk profile. Additionally, a risk governance maturity assessment can help identify strengths and weaknesses, so that you can develop an action plan accordingly. Training and awareness programs should be provided to your risk owners and committees to improve their risk knowledge, skills, and culture. Risk management tools and systems should be implemented to facilitate risk identification, assessment, management, and reporting processes. Lastly, benchmarking against industry best practices and standards can provide external assurance and validation of your risk governance processes.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?