Risks are alive!

Top-Down approach. Who would know better than the top executives and directors about the #megatrends and how they play a role within the #riskportfolio of a company. After the #riskappetite statements are defined, it is just a question of understanding the consequences when things go awry, so right there, the company has a detailed list of significant risks, which may hinder the company’s results, market position, etc. on a large, scale.

Bottom-Up approach. Who would know better than the employees and middle #management dealing with the functions and operations on a daily basis, everywhere in the company. Risks identified with this approach may not seem as significant, however they are certain, and if repeated in every single location or country and business within a company, the company has a completely different set of significant risks, which may hinder the company’s results, market position, etc. on a large scale.

Risks are life beings. The above approaches prove to give a complete set of risks, which needs to be taken care of. Depending on the full impact, probability of occurrence and velocity, risks need to be prioritized so they can be managed appropriately. So the important thing is identification and assessment. In a way, #BlackSwans would be risks that have never been identified, so should they have been, could have been prevented at least partly. Which ironically means they were there… Risks are a form of life, with their own cycles. They are born and then they grow and mature, and eventually die. #Riskmanagement must be there to ensure that risks don’t blow up when they can hurt more without having been previously identified and mitigated #risklifecycle

Emilio Rubio on March 30, 2019