The last few years have seen a fundamental shift in risk-awareness across organizations. Boards and C-Suites are demanding better insights into the multitude of risks their organizations face. They recognize the interconnected nature (and opportunity) of risk. They want to ensure their organizations are operationally resilient and prepared to survive or even thrive in uncertainty.
In LogicGate’s second annual Risk Management Survey, 190 senior executives shared their risk management practices and how they build risk awareness. With risk increasingly perceived as a driver of opportunity, organizations are taking a more comprehensive approach to risk management.
When asked which department(s) is responsible for managing different types of risk, survey respondents cited multiple departments as being risk owners even across a single type of risk. Risk management has become a firm-wide practice. As risk touches every aspect of a firm, risk programs span entire organizations, and senior executives lean on cross-divisional teams for effective risk identification and mitigation.
Best Practices for Shared Risk Management
Dispersed responsibility for risk requires organizations to align their risk management structures to support this effort. With risk being managed across the firm, effectively communicating risk information to inform strategic business decisions requires organizations to adopt a shared language, collaborative solutions, and a comprehensive GRC platform.
No longer is operational risk management strictly the domain of the operations department nor is strategic risk managed solely by the board. Effective risk management demands collaboration across multiple divisions, including business units, information security, finance, compliance, legal, audit, and risk. To support the shift to a cross-divisional risk framework, organizations must build a common understanding of risk and a shared vocabulary, so organizations can effectively embed risk into their decision-making process.
Siloed data or internal systems that don’t communicate can also make risk management more challenging. Shared ownership across divisions requires an integrated set of tools that make it easier to identify and capture emerging risks so boards and executive teams can take strategic action.
According to Gartner Group, boards perceive compliance, security, and risk management as the major obstacles to them achieving their strategic goals. This aligns with survey respondents who said the information boards and executive teams want foremost is analysis and insight on new and emerging risks. Aggregating information and generating meaningful insights from data dispersed across multiple divisions is easier with a robust reporting platform.
A holistic GRC solution allows organizations to design risk scoring and reporting infrastructure so strategic business decisions can be better informed. Furthermore, a shared platform supports a common language and collaborative tools to enable deeper risk insights and proactively plan for what’s coming, both important practices for operationally resilient organizations.
Risk is shaping strategic decision-making at many organizations, with firms wanting deeper insights and better analysis. Distributing responsibility for risk management across the firm supports more thoughtful information gathering. Implementing the right practices, tools, and platforms to support this enhanced risk-awareness can help you gain a competitive advantage.
Discover what other risk professionals are focusing on to support operational resilience at their organizations and more key insights from LogicGate’s second annual Risk Management Survey by downloading the full report here.