risk management 52Risks risk taxonomy

More and more business leaders are appreciating the interconnectedness of risks, both internally within the business and externally. Decisions made in one part of a business can directly or indirectly impact risks in another part of a business.

Business leaders need to have robust and structured risk management practices to be able to anticipate, pre-empt, and manage these interconnected risks. A detailed risk register alone will not necessarily inform business leaders and risk managers about these relationships. It Is critical that leaders move beyond siloed risk assessment and fully appreciate the complex interdependencies in place.

Key activities that can assist in developing robust business strategies will include:

  • Cross-Functional Dialogue and Scenario Planning – it is important to facilitate workshops where diverse teams can undertake and brainstorm potential disruptions across the organization.
  • Identify Critical Interdependencies – from the workshops and the existing knowledge of the business, leaders and risk managers can look to identify the critical links between risks. Understanding these links will enable the development of business continuity plans and other mitigation strategies. It may also lead to a previously unidentified need to change strategy.
  • Conduct Crisis Exercises – regularly simulate real-world scenarios and practice how the organization will respond to the events identified. These exercises can further deepen the organization’s understanding of the interconnected risks. Follow up these exercises with the development of detailed playbooks for any crises that may arise.
  • Invest in Enterprise Risk Management (ERM) – An investment in ERM will enable the organization to put its best foot forward in dealing with complex and interconnected risks. ERM practices will foster an organization-wide risk culture, encouraging information sharing and collaborative risk assessment.

By acknowledging and embracing interconnected risk assessment, business leaders can give their organizations the best chance to both navigate the complexities of today’s world and take advantage of opportunities that arise. It’s not about eliminating risks, but rather understanding them and building a resilient business strategy.

The 52 Risks®  Resources Center can assist undertake the above, including the 52 Risks® infographic and the Mapping the 52 Risks® Template

#strategicrisks #financialrisks #operationalrisks #enterpriseriskmanagement