HOW RISK IMPACTS EVERY ORGANIZATION
In today's environment, there are few things that can represent more of a competitive advantage – or disadvantage – than an organization's ability to navigate decisions about risk. This includes risk-taking, risk avoidance, risk strategies, and risk management. No matter how big or small: every organization is impacted by risk.
However, understanding these risks and their impact across a complex organization can seem overwhelming. An easier way to think about risk is to consider how three primary navigation components help an organization manage risk successfully.
Board Oversight (Board of Directors)
"Central Command Center"
The board's role in the "navigation system" is to help steward the mission/vision, set strategic direction, define risk appetite, and ensure a strong and effective control environment to keep the organization protected. Today's board oversight needs to be risk-informed and agile. Much like a central command center for a rocket, they can help see things from a big picture perspective, objectively assess risk-based decisions, and help set a game plan for success.
Strategy Execution (Management)
"The Aircraft & Crew"
Management's role in the "navigation system" is to execute the mission/vision, carry out strategic direction, make day-to-day decisions about risk-taking, and ensure effective execution of controls to keep the organization protected. Today's strategy execution needs to be risk-informed and dynamic. Much like the crew piloting a rocket, they can see things more quickly that may need to change and are in the best position to respond to emergency situations – with assistance from the central command center.
Risk Management (Monitoring)
"Navigational Data & Indicators"
Monitoring's role in the "navigation system" is to verify that ethical conduct, corporate responsibility, risk management, and compliance guardrails are operating as intended and work effectively to keep the organization protected. Today's risk management needs to be real-time and proactive. Much like the dashboards inside of a rocket, this monitoring system can help management be aware of any issues/blind spots that could impede ongoing success and ensure the central command center has a data-driven view of the risk profile to help set risk appetite.