In this post-pandemic world, global business risks are increasingly changing at a rapidly. Companies must re-frame previous perspectives, respond across the entire operations and strengthen their resilience proactively.
Businesses can mitigate or decrease risk levels by achieving clear and accurate insight. Though no company is immune from risk disruptions, companies that build resilience will have a strategic advantage and be better equipped to respond to disruption effectively.
Risk management involves responding to change and shifting the approaches to manage risk. Specifically, re-evaluating risks from different perspectives and considering other management methods such as applying new technologies, new data and external support. Today's complex corporate challenges the C-suite faces require a shifting perspective of the risks involved and strengthening the organisation's ability to adapt to the future.
At Horizons, we serve global corporations in managing risks in the current new world order and understand the challenges of migrating risks in evolving global markets. Below we outline three best practices for shifting perceptions in risk management.
Robust Risk Monitoring
C-suites should have an overview of those taking bold initiatives, and their teams usually understand its direct risk impact. However, the interconnectivity of risks within a global company can result in unintended consequences. Therefore, companies need to leverage varying new risk control methods to assess risk scenarios better and conduct robust risk monitoring. Usually, a Chief Risk Officer is created to lead risk management and monitoring , which can generate significant value for the entire executive team.
Defining Risk Appetite
Defining an enterprise's risk appetite and developing a solid risk culture is crucial to risk management. Companies may have adjusted their risk strategy, but face challenges aligning their employees and corporate culture. Therefore, risk appetite is crucial to employees' understanding of the risks when pursuing opportunities. A strong risk culture can be influential in assisting companies to leverage benefits flexibly and safeguard from negative consequences. Professional institution surveys [insert reference] reflect that over half of executives are moving in this direction globally, and nearly 60% of respondents have identified a risk appetite and are setting a risk culture.
Furthermore, it allows companies to anticipate risks and monitor changes in real-time, so that management can confidently and agilely identify the following steps within a changing market. In a rapidly changing world, organisations cannot simply predict future risks from the past. Only 29% of organisations in the [insert reference] survey have invested significantly in risk technology to identify and monitor risk. In contrast, the risk functions genuinely leading the way are using external data, analytics, technology support, just like other functions such as finance, customer, and operation.
Leveraging Diverse Teams
Professional teams with diverse skills-set should be leveraged to support risk-based decision-making. Risk management requires teamwork, working with diverse perspectives to avoid risks and seize opportunities simultaneously. 70% of the companies surveyed prioritise diverse team skills in their key risk roles.
Some risks can be detected by reviewing the implementation of internal control systems. In contrast, implicit risks require monitoring at all times. We advise combining legal and financial compliance reviews and cross-validation for conclusive results.
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