Is your exposure where you want it?
Where is your risk ‘sweet spot?’ Finding the optimal level of risk exposure for the business in pursuit of strategic goals and objectives is becoming more difficult than ever before. To achieve this, businesses need to adopt some structure in determining how much risk they should be, and already are, taking.
The level of uncertainty inherent in many of today’s business decisions require organisations to consider their exposure to risk in greater detail.
In order for businesses to understand and define their guiding principles in this area, they should consider their capabilities and overall approach to risk appetite.
A multi-stage approach to risk management and determining risk appetite is described in the attached report and emphasises the importance of:
- First steps
- Establishing your appetite for risk
- Agreeing your risk appetite position
- Actioning your risk appetite position
- Monitoring and reporting
For each section we outline some key content and then conclude with a range of key questions for Boards to consider.
We believe that the practical application of a risk appetite approach can enable businesses to better understand their exposure to specific operational and strategic risks and decide whether they are comfortable with this level of exposure. This comfort should support improved decision-making and enhanced risk management.
Our expert says…
“As we discuss the broader risk topic with businesses we see encouraging attempts to improve the value of existing risk management functions and to help senior leaders understand how to protect and enhance the value of the business better.”
David Noon, Managing Partner, Risk Advisory