Risk is our business, I can assure you, as long as I’m here, as long as my colleagues are here, we do know about risks. If things do go wrong you won’t hear us saying we didn’t know it. Oswald Grübel, UBS’s chief executive, November, 2010
Enterprise Risk Management
Charlie [Munger, vice-chairman] and I believe that a CEO must not delegate risk control. It’s simply too important. At Berkshire, I both initiate and monitor every derivatives contract on our books . . . If Berkshire ever gets in trouble, it will be my fault. It will not be because of the misjudgments made by Read More
Recently, during a Risk-based performance implementation, we were asked by our client for advice on approaches to understanding the relative maturity of their current approach to risk management, which level of maturity is right for them and how to measure maturity post implementation.
Google ‘Risk Maturity Model’ and a number of very interesting approaches will be presented. Many of these models provide the answer to the question ‘How mature is our risk management process?’ in one form or another. However, in this case, answering this single question didn’t feel sufficient as our client was seeking to do more than simply ‘tick boxes’ with this project. They were seeking to drive a business transformation.
Further research uncovered Michael Hammer’s, Process and Enterprise Maturity Model (PEMM) which
Analytics and the application of Business Intelligence concepts to Performance and Risk Management are fundamental to the Risk-based performance methodology; therefore we would like to share with you this short video that points to the future if BI. The potential to apply this technology to performance and risk management is very interesting. Enjoy!
Why is the Strategy map such a key part of the Risk-based performance methodology? Why is the Strategy map so important for the success of operational risk projects? These are two questions that we are often asked and the answer to both questions is fundamentally the same.
Risk doesn’t mean danger—it just means not knowing what the future holds. That insight resides at the core of risk management for companies, whether in managing the potential downside of an investment or putting a value on the option of waiting when making irreversible decisions. In this video Peter L. Bernstein also explains why in Read More
To promote discussion and debate around the integration of performance and risk management, we recently posted a very simple question in the Enterprise Risk Management Association group on Linkedin.
Should organisations integrate performance and risk management?
The replies are below and I would welcome further comments/feedback.
The British Standards Institution has recently released a new Risk Management Code of Practice – BS31100. BS 31100 is designed to provide a basis for understanding, developing, implementing and maintaining risk management within any organisation in order to enhance an organisation’s ability to achieve its objectives. This British Standard establishes the principles and terminology for Read More
It is important to clarify ‘the need’ for the Risk-based performance methodology. So what is the problem(s) it addresses? We see five critical needs:
One of the most challenging aspects of implementing corporate performance management or risk management projects is how to embed these philosophies into the daily culture of your organisation.
Outlined below are a couple of examples of how the Risk-based performance approach can help embed corporate performance and risk management philosophies into your organisation – a topic we will return to often on this site. Here we look at issues relating to silo processes and internal control certification.
Northern Rock and HMRC – a letter to the Editor, Financial Times, from 29 November 2007.
One of the questions that we are often asked is “Does Risk-based performance help us build ‘the right’ culture? If so, how?”
The development of the right organisational culture is one of the key benefits that the Risk-based performance methodology brings and is central to its design. One of the specific aspects of the methodology – the interaction between the Strategy map and Risk map – plays a critical role in setting the tone and encouraging the development of the ‘right’ culture.