How can you manage risk with board and senior management?

In my view to manage risk effectively with the board and senior management, follow these steps: 1. Establish Clear Roles and Tasks for BoD and Sr management by creating Risk Committees and drafting policies and procedures 2. Align Risk with Co. Strategy by devising a strategic plan 3. Identify and Evaluate Risks by developing Risk Registers and assessing their likelihood and impact 4. Mitigate Risks by developing proper plans and implementing controls 5. Report and communicate to keep the relevant authorities by issuing risk reports 6. Build a Risk-Aware Culture within the org. by training and creating a culture of open communication about risk rather than concealing it. 7. Monitor and Improve to update or enhance the controls implemented.

Worst thing to happen for any organization is surprise for the management. All the activities like major projects, activities with variables or uncertainties are required to be documented and signed by the responsible person for their area of operation. once tabulated it needs to be presented to board members with mitigation measures undertaken

A key insight to managing the Seniors is to keep them close to the reason for risk and what is already being done to mitigate. Use your circle of influence to help pass the message along so it’s no surprise.

Visualize this: In a corporate setting, the board is similar to the coxswain in a rowing boat. They're responsible for guiding the direction and pace, maneuvering through different water conditions, based on their assessment of risks and opportunities. Meanwhile, executive management, resembling the rowers, drive the boat forward, implementing the coxswain's strategies and adjusting to various situations. Also, the role of internal audit in risk management is vital. Comparable to an alert observer on the boat, the internal audit team looks out for potential issues, like hidden dangers, and communicates with both the coxswain and the rowers, contributing to navigate away from potential troubles.

Clarifying roles and responsibilities within the board and senior management is a foundational step in effective risk governance. This involves delineating who is accountable for identifying, assessing, mitigating, and monitoring risks. The board typically sets the risk appetite and strategic direction, while senior management executes risk management processes and reports on risk exposures. Defining these roles fosters accountability and ensures a coordinated approach to risk management. Moreover, it enables clear communication channels between these leadership tiers, facilitating informed decision-making, risk-aware strategic planning, and the establishment of a risk-aware culture within the organization.

1. Have a holistic view of risk... reputational, operational, financial, etc...include the risk of doing nothing. 2. Measure and quantify the risks, be realistic. 3. Evaluate the risk management options, including their cost in terms of people,process, tech enablement, money, time. Consider the probability of success 4. Identify a preferred solution and what you need to implement it. 5. Outline how you will measure success. 6. Above all else, make sure that everything is backed up by a good mechanistic understanding of how and why the risk exists and that the recommended solution has been vetted as operationally sound. That means talking to people who add the value. Maintain a risk register that is integrated with planning.

Nothing beats direct conversation with the board management and other senior management staff Explain them the true picture, be practical and always remember everyone speaks about the problems but few discuss the solutions too.... Demonstration of some practical aspects would also be beneficial

One example of ensuring accountability by the board and senior management in the risk management process is to include these responsibilities in their Key performance indicators (KPIs). KPIs in most organizations are a performance contract which is reviewed annually and thus ensures that the responsibilities are carried through in a manner that improves the risk resilience of the organization.

It shouldn't be only about defining roles and responsibilities, most importantly is the "Buy-in" I believe! It is crucial to well clarify and demonstrate the value of Risk Management and its reflection on stakeholders, management, employees and reputation! "Buy-in" is a key of engagement, ownership and transparency necessary to optimize efficient implementation and valuable outcomes of Risk Management.

Primordial a criação de uma política corporativa ou documento estatutário estabelecendo os papeis e responsabilidades de cada órgao da governança corporativa, além da propria funcao de areas de segunda linha, como gestao de riscos e controles internos.

One of the best ways to do so on a continuous basis is establishing a Risk Register. It should contain all known risks, their likeliness and impact, as well as potential mitigation measures. It's basis is an internal audit of a company and its departments, and it should be reviewed at least once a year. Thereon based a Business Continuity Plan can be devised, making sure performance doesn't decrease or even halt in case of risk events. Finally, all of this makes up a basis for an informed strategy that manages risks and plans for potential accruals needed.

Mantra is any business comes with inherent risk associated with it. All the risk activities are required to be prioritized in order of importance. High, medium and low. Important aspect is to quantify the risk in absolute terms so that the decision makers can make a informed decision taking risks into account and impact on business.

Key are the The Terms of Reference (TOR) that is spelt out. For example: Chairperson: Leads board meetings, ensures effective governance, and represents the organization. Board Members: Provide strategic direction, make key decisions, and act in the organization's best interests. Secretary: Maintains records of meetings, manages communication, and ensures compliance with legal requirements. Committee Members: Contribute expertise to subcommittees or task forces for specialized areas like finance, audit, or governance. CEO/Executive Director: Implements board decisions, manages day-to-day operations, and communicates with the board. These roles collectively uphold the organization's governance framework and strategic direction.

In this regard, having senior stakeholders (Head of department or above) as risk owners, as well as reporting regularly to the C suite resulted tremendously effective for me.

Aligning the risk management approach with organizational strategy and performance objectives is paramount for effective risk management. This entails integrating risk considerations into strategic planning processes, ensuring that risk management isn't viewed as a separate function but an integral part of decision-making. By aligning risk management with strategic goals, an organization can identify potential risks and opportunities that may impact its ability to achieve objectives. This approach also helps prioritize and allocate resources effectively, optimize risk-reward trade-offs, and foster a culture of risk-conscious decision-making, enhancing the organization's resilience and ability to adapt to a changing business landscape.

Independente do grau de maturidade em temas que envolvem GRC, é interessante que haja um alinhamento técnico e conceitual com a alta administraçao e executivos. Nesse contexto, saber quais objetivos estrategicos da companhia, as principais dores, principais projetos além dos fatores criticos internos e externos, certamente dará mais transparencia e assertividade nas atividades da gestao de riscos.

Independente do grau de maturidade em temas que envolvem GRC, é interessante que haja um alinhamento técnico e conceitual com a alta administraçao e executivos. Nesse contexto, saber quais objetivos estrategicos da companhia, as principais dores, principais projetos além dos fatores criticos internos e externos, certamente dará mais transparencia e assertividade nas atividades da gestao de riscos.

Proper maintenance of the Risk Log and having updated Risk Management Policy and Manuals are mandatory for the alignment of risk with strategy and performance. Most important is updating the organization's technology from time to time with having fit and proper criteria for all installed machinery and systems at all levels.

Normally Risk management to be analysis ,align, by Risk priorty Number (For example,1 to10 ) As per Mr.singa Raju said that order of importance High, medium and low , Important aspect after analysis process who take care Decision making during the performance is that important step , During decision making your stategic direction and stake holders expectations based on align Risk priority.

To ensure effectiveness and completeness of risk reporting, i have realized that it helps if the risk policy of the organization clearly defines the key reports that should be brought to the attention of the board and senior management. Also, these reports should be defined as inputs for named committees in the organisation with Executive management representation. This process ensures the effectiveness and completeness of the risk reporting since internal and external auditors of organizations do audit adherence to policies and thus put stakeholders on their toes.

I would say that regular reporting of risk would almost be on a daily basis, or rather every time a new contract is being reviewed, a new supplier is being engaged or a new ad-hoc service/business is about to start. Risk review and management, as well as reporting should be preemptive, before something is signed or started. The only exception can be events of force majeure, but even for most of them certain risk management or mitigation measures should be in place so as to prevent loss of life and property, as well as business continuity.

Reporting risk regularly and effectively to the board and senior management is essential for maintaining transparency and informed decision-making. It involves compiling comprehensive risk assessments, highlighting emerging threats, and discussing potential opportunities. These reports should be presented in a structured format, offering insights into risk exposure, mitigation efforts, and alignment with the organization's risk tolerance. Effective communication ensures that leadership understands the evolving risk landscape, enabling them to make strategic adjustments, allocate resources appropriately, and uphold the organization's overall risk management strategy, thereby enhancing resilience and long-term sustainability.

Risk management supports the business though its assessment. Risk-taking involves making decisions or engaging in activities with uncertain outcomes. It can lead to success, failure, or somewhere in between. Risk-reward, on the other hand, assesses whether the potential benefits or gains outweigh the potential negative consequences or losses associated with a risk. Evaluating risk-reward helps individuals and organizations make informed choices by weighing the potential benefits against the potential drawbacks. While some may embrace high-risk strategies for potentially high rewards, others may opt for more conservative approaches to minimize potential losses.

Monitoramento continuo e reporte está presente nos maiores frameworks que envolvem temas de GRC. Não somente é boa pratica ou altamente recomendado, a meu ver, é atividade obrigatoria de gestores de riscos, fazerem seus reporte periodicos aos seus executivos, proporcionando assim dados estrategicos e subsidio para tomada de decisoes.

It's not just reporting. It is about having uncomfortable discussions with the Executive team and them to cascade to their teams on outcomes, respectively.

Frequency of risk assessment depends upon the seriousness of the issue on hand. First meeting itself depending upon nature of activity frequency of meeting will be decided. In cases where the situation is fluid and unclear we had instances wherein risk assessment is done on weekly basis till the situation normalizes. Risk assessment together with mitigation measures needs to be quantified

One thing I found of high value when sharing risk with Board and Senior Management is to co-share.. Ask your senior manager to present the risk to the board. Not only you are guaranteeing highest level of engagement but also the language used will be more relevant.

In my experience managing risk with the board and senior management is only possible after identifying the sponsor of risk management within the company or organization. There are 3 types of sponsors - owner, general manager, and risk manager. If risk management is sponsored by the owner engagement of stakeholders will be successful. If risk management is sponsored by the general manager engagement of stakeholders will be achieved. If risk management is sponsored by the risk manager engagement of stakeholders most likely won't exceed legal requirements.

A significant threat to effective risk management is what I call the "Boardroom Effect". Where the board over-relies on routine management reporting. I have seen boards who received reports that should have set off alarm bells, react passively because the reports weren't labeled 'Risk Reports'. The 'update reports' from management were early evidence of missed performance targets, inadequate business intelligence, crashing initiatives and company culture run amok. Education and engagement to raise awareness of risks and to simulate response activities at the board level is critical. Inadequate experience in the boardoom can be catastrophic. Leadership starts at the boardroom; let's make sure it's well-equipped.

To mitigate the risk, this must be the crucial responsibility of all employees from top to the bottom line management to inform the board and stakeholders before it's too late to handle high loss with demage of good will.. Besides all the market fluctuations there is always space for human error..if there are good relationship and strong corporate communications among all employees then they will not hesitate to inform each other. Hence, company can be protected from any sever loss by collective efforts.

One way to effectively engage board members is to highlight their individual risk exposure. Both executive and supervisory board member can be held liable by shareholders if failing in properly discharging their duties. While their risk may be limited or mitigated in various ways (e.g., business judgement rule, D&O insurance), the best protection remains and effective governance and active participation in the management of key risks, particularly for members of the audit, compliance and risk committee.

Best option will be to create a policy on risk management assessment to be approved by the board members. Usually for every organization it will be responsibility of CFO to be responsible for risk management which includes training all the stakeholders. Simulation is also required to be provided of sensitivity analysis for various scenarios together with potential impact in absolute terms.

Educating and engaging the board and senior management on risk management topics and issues is vital for building a risk-aware culture. This involves ongoing training sessions, workshops, and discussions to enhance their understanding of evolving risks, regulatory changes, and best practices. Engaging leaders fosters their active participation in risk discussions, encourages the sharing of insights, and empowers them to ask critical questions. This collaborative approach not only strengthens risk governance but also aligns organizational goals with risk strategies, promoting a proactive and responsive stance towards risk management within the organization.

I have a slightly different perspective to this point. Board members should not be involved in the running of operations. Risk management comes within preview of the senior management to ensure that all the areas are covered and points raised by board are required to be addressed. Credibility of management is at stake to ensure that surprises are avoided at any cost unless if it is a force majeure situation

Seeking feedback and improvement input from the board and senior management is a crucial step in refining risk management practices. This process involves actively soliciting their perspectives on the effectiveness of risk strategies, the alignment of risk management with strategic goals, and the adequacy of risk mitigation efforts. Regular feedback loops allow for continuous improvement, identification of blind spots, and the adaptation of risk management processes to changing circumstances. It reinforces a culture of accountability and transparency, enhancing the organization's ability to respond effectively to emerging risks and opportunities.

1. Avoid surprises. 2. Document & report all material risk metrics regularly. 3. Be open to hear & act upon additional or contrary viewpoints. 4. Gain trust. That's extremely important.

I'm add the ability to get the board to share, listen and be open to additional perspectives. Too often no one want to take rhe risk of being contoversial and presenting difficult decisions.

Always start your meetings with story telling. Share a story of high risk situation, best practices of how risk was treated, or even learnings of how it wasn't properly mitigated. When sharing risk becomes a norm. Ask senior managers to start sharing their story... trust me, you will receive stories you never expected and impact will be even higher.

In my experience a lot of risk when considering executive leaders and board rely on - using regular forum ( say monthly operating review) is to be specific in indication of risk realization as well as mitigations in place . It is helpful to use data for clarity and specificity - assuring communication of risk burn down and remaining indicators around realization - Pro- activeness to ensure being out in front and instilling confidence in risk management process versus reporting risk realization and immediate issues / impacts

Consider adding integrity due diligence to the process of engaging new suppliers, especially if the services they provide are somewhat sensitive or they come into contact with government officials (e.g. services of customs clearance or customs brokerage). Devise a questionnaire based on the principles of KYC and review the approved suppliers every 2-4 years depending on the type and exposure of services provided. This way you also prove compliance and protect your reputation.

The Risk Management Committee and Board RMC specifically created for the supervision of Risk Management across the organization must have relevant exposure and background checks with fit and proper criteria so that they can easily understand the situation and its impact, to safeguard the interest of the organization...

1.Proactive communication to the board and senior management on the risk exposure 2.Early warning signals on any emerging risk which may impact the organisation from a financial standpoint 3.Weekly updates on the risk appetite and risk tolerance levels and to highlight if there are any breaches for seen 4.Audit findings both internal and external to come under notice of board and management Periodic risk exposure to be discussed and any response plans to be sought approval from board and management