How effective is your risk oversight?

In my role, I see risk oversight as crucial. It ensures we’re not just reacting to risks, but proactively managing them. This foresight protects our assets and guides strategic decisions, aligning with our long-term objectives. It’s about creating a resilient, forward-thinking organization.

Actually every change starts at the top. Therefore, the attitude of the top management matters the most when companies are defining risk oversight strategies. The risks are given priority on the same basis considering the overall environment the company is working in and the long term goals of the companies..

Risk oversight is the vigilant guardian of an organization's stability and growth. Risk oversight objectives are the foundation upon which effective risk management is built. They provide direction, measurability, and relevance to your risk management efforts. In an ever-changing business landscape, organizations must continuously evaluate and adapt their risk oversight objectives to stay resilient and secure. By aligning these objectives with the organization's mission, risk appetite, and stakeholder expectations, you can embark on a journey toward a more robust and responsive risk oversight framework.

To start talking about risk levels you need to have an understanding about appetite or tolerance. A good starting point is the probability of insolvency, and more up towards profitability

In organizations, the approach to managing risk varies depending on their business model and the specific risks they face. Understanding the organization's risk appetite or tolerance is crucial. Risk oversight objectives are tailored to the landscape and environment in which the organization operates, influenced by environmental, physiological, emotional, social and political factors.

Firms don't operate in a silo having dependencies on third parties to support a company's operations and technology, clients, etc. Therefore, its paramount that the firm's policies, roles and responsibilities account for those entities' oversight, including but not limited to, communications to/from the vendor (such as cyber events) and escalation/notification policies and procedures.

O Banco Central do Brasil indica os papeis e responsabilidades de cada figura numa Institui??o quanto a gest?o e supervis?o de riscos. Porém a terminologia "supervis?o de riscos" é abrangente, pode ser entendida como a supervis?o da estrutura de gestao de riscos realizada pela 3 linha (auditorias e órg?os fiscalizadores) ou pelo monitoramento contínuo dos riscos ja identificados ou menos novos riscos do negócio. Quanto ao monitoramento de riscos, uma ferramenta muito poderosa é a gest?o de perdas financeiras oriundas de materializa??o de riscos que permitirá vis?o de onde est?o oa riscos mais relevantes, alem disso um cronograma para atualiza??o tempestiva das matrizes de riscos, trará muito resultado.

O Banco Central do Brasil indica os papeis e responsabilidades de cada figura numa Institui??o quanto a gest?o e supervis?o de riscos. Porém a terminologia "supervis?o de riscos" é abrangente, pode ser entendida como a supervis?o da estrutura de gestao de riscos realizada pela 3 linha (auditorias e órg?os fiscalizadores) ou pelo monitoramento contínuo dos riscos ja identificados ou menos novos riscos do negócio. Quanto ao monitoramento de riscos, uma ferramenta muito poderosa é a gest?o de perdas financeiras oriundas de materializa??o de riscos que permitirá vis?o de onde est?o oa riscos mais relevantes, alem disso um cronograma para atualiza??o tempestiva das matrizes de riscos, trará muito resultado.

Assigning and clarifying roles and responsibilities is crucial in effective risk oversight. From the board to senior management, and risk owners to audit teams, each party must have defined scopes, authorities, and accountabilities. This includes setting risk policies, monitoring performance, and providing assurance. Clear communication channels and coordination mechanisms are essential to prevent duplication and confusion.

Risk Oversight Roles and Responsibilities ? Assign clear risk management roles across the organization. ? Ensure board oversight on critical risk areas. ? Empower risk committees with decision-making authority. ? Define responsibilities for risk identification and mitigation. ? Establish accountability for risk management outcomes. ? Integrate risk responsibilities into all job descriptions. ? Encourage cross-functional collaboration on risk issues.

A Supervis?o de riscos permeia pelas atividades da 3 linha de defesa para garantir a correta execu??o dos processos de gest?o de riscos de uma Institui??o. Deve ser considerado também, testes e monitoramento no ambiente de controle interno da Empresa, que visa garantir a correta execu??o dos principais controles. E alem disso deve ser monitorado as perdas relevantes oriundas de riscos, aplicando estudo de causa raiz e plano de a??o para melhoria. As matrizes de riscos devem ser atualizadas tempestivamente de modo a refletir a realidade dos processos. Todo esse ecossistema de gest?o de riscos deve contar com normas e políticas estruturas e divulgadas a todos os colaboradores.

Establishing a robust risk oversight framework and processes is paramount. This framework encompasses principles, standards, and tools that align with industry-specific risk management practices and regulatory requirements. It should seamlessly integrate with existing risk management frameworks while adhering to aviation regulations and best practices. The risk oversight processes involve systematic steps for risk identification, assessment, management, and communication. These processes must be streamlined, efficient, and responsive to feedback, ensuring the continuous improvement of risk management practices within the aviation sector.

Risk Oversight Framework and Processes ? Implement a structured risk management framework. ? Develop processes for continuous risk assessment. ? Integrate risk management into strategic planning. ? Employ tools for risk analysis and visualization. ? Standardize risk reporting formats and frequency. ? Facilitate risk escalation procedures for timely response. ? Incorporate feedback loops to improve risk processes.

In aviation risk management, cultivating a strong risk oversight culture and behavior is essential. This entails instilling shared values, attitudes, and norms that prioritize safety and proactive risk management. Observable actions and decisions should reflect this culture, promoting collaboration, transparency, and accountability. Leadership plays a crucial role in fostering this culture, supported by training, incentives, and recognition for risk oversight parties. By creating a learning-oriented environment, aviation organizations can continuously improve their risk management practices and enhance safety outcomes.

Risk Oversight Culture and Behaviour ? Promote a culture of risk awareness and openness. ? Encourage the reporting of risks without fear of repercussions. ? Reward proactive risk identification and management. ? Provide regular training on risk management practices. ? Embed risk considerations into decision-making processes. ? Foster an environment of continuous improvement in risk management. ? Lead by example at the executive level to reinforce a risk-conscious culture.

In my opinion, it is essential to establish the actions to be taken if violations are detected in the risk analysis. Deferring decisions to the board of directors may take too long for effective implementation. Exactly as happens in financial institutions, companies should equip themselves with different decision-making and control levels that allow rapid intervention if excessive risks are detected, involving the board and management only in strictly necessary cases.

Ensuring a mix of quantitative and qualitative measures is crucial in risk oversight. The control environment forms the foundation of our assessment, guiding us to balance hard data with nuanced insights. This approach is vital for a comprehensive evaluation of our risk management effectiveness.

Risk Oversight Performance and Outcomes ? Measure the effectiveness of risk management activities. ? Link risk management performance to executive compensation. ? Regularly review risk management strategies and outcomes. ? Publicly report on risk management progress and challenges. ? Adjust risk strategies based on changing external and internal factors. ? Utilize technology to enhance risk monitoring and reporting. ? Celebrate successes in risk management to encourage engagement.

? Risk Communication Strategies ? Crisis Management and Response Planning ? Risk Financing and Insurance Strategies ? Regulatory and Legal Risk Management ? Cybersecurity and Information Risk ? Supply Chain and Operational Risk Management ? Environmental, Social, and Governance (ESG) Risks ? Innovation and Competitive Risk ? Reputation Risk Management ? Talent and Human Capital Risk ? Financial Market and Credit Risk ? Strategic Partnership and Alliance Risk

Acredito que possa haver confus?o com o termo "supervis?o de riscos" pois algumas Empresas possuem inclusive um departamento nomeado como "Supervis?o". Além disso, no Brasil, as auditorias e órg?os fiscalizadores tem o papel de supervisionar a estrutura de gest?o de riscos nas Empresas. Mas monitorar os riscos de uma Institui??o é de responsabilidade de todos os colaboradores, porém cada um com sua devida atribui??o.

It's important to consider the unique challenges and opportunities present in your own industry. With the rapid evolution of technology and changing regulatory landscapes, risk management professionals must remain vigilant and adaptable. Incorporating real-life examples, case studies, and lessons learned can provide valuable insights into effective risk oversight practices. Furthermore, fostering a culture of open communication and knowledge sharing among industry peers can enhance collective efforts to mitigate risks and improve safety outcomes. By embracing innovation, collaboration, and continuous learning, aviation organizations can navigate the complexities of risk management with confidence and resilience.