Thoughts: Week 2 Principles of Risk Management

Following Week 2 of the Principles of Risk Management course, I started thinking more about the conscious and unconscious risk management decisions company executives make in addressing known and unknown risks.

After identifying known risks, company executives and risk managers often struggle deciding how to address them (even if it means doing nothing). The reality is that buying insurance only partially mitigates economic risk. Companies already (sometimes unwittingly) mitigate operational risks every day by deploying techniques such as ensuring that employees have adequate personal protective equipment and investing in safety training. Other companies thoughtfully mitigate financial risk through strong financial controls and dual accountability protocols.

Therefore, I believe it’s paramount for company executives and risk managers to spend more time together to gain a more complete picture of their company’s risk. Only after thoughtfully identifying risks can company executives and risk managers begin to effectively navigate the many uncertainties in business.