Transcript Richard Thomas

BUSINESS RISK SENTIMENT
Building a positive risk culture
Richard Thomas
IRM Risk Leaders Conference 2015
New risks
In June 2014, we presented the results of our initial research on managing
risk in a challenging business environment. These confirmed our belief that
businesses had taken on a range of completely new risk exposures over the
last few years.
Over a third had gained exposure to new market or product risk and three in
ten had taken on new operational risk. Many others had also assumed new
financial risk and new strategic risk. Our conclusion is that the majority of
businesses have become more tolerant of risk in recent years as they seek
to win new business.
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Approaching risk
Specific areas for attention included:
• identifying what risks can be
measured and how best to do this;
• improving ownership within the
business for capturing data about
specific incidents and ensuring the
accuracy and consistency of that
data;
• how to use the information captured to
identify strategies for improving risk
management; • allocating
responsibility and tracking activity, and
• improving ability to measure and
quantify the resulting return on
investment.
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Recovering economy
• This was published last
February when we looked at
the implications for risk
management in an economic
environment of continuing
uncertainty. It confirmed the
complexity of the risk
management challenge
currently facing individual
businesses.
• Risk profiles remain in a state
of continuous flux against a
background of increased levels
of risk and new exposures for
many businesses.
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Recovering economy
There was also increasing unease about the outlook for interest rates, with one in five businesses seeing this as the
most worrying aspect on the UK economic horizon. Nearly one in four decision-makers indicated that an increase in
interest rates of up to 0.5% would start to have a tangible impact on their own business. A higher increase of up to
1.5% would affect almost half.
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Risk culture
› Organisational culture can be one of the
cornerstones of success in managing
risk or a real barrier to progress.
› I would define a positive risk
management culture as a set of
shared beliefs and values about the
importance of risk management
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Positive risk management culture
Our latest research focuses on the extent to which UK businesses have a positive risk management culture embedded
throughout their organisations, the critical steps they need to take to embed this culture, and which of these steps
have the greatest impact.
It seems that relatively few businesses in the UK believe they have a positive risk culture that is genuinely embedded.
Only 30% of respondents indicated that their businesses had embedded a positive risk management culture to a
‘significant’ degree.
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Components of risk awareness
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Senior management leadership and direction
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Identification of an appropriate risk culture
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Regular awareness and development programmes
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The ability of employees to speak out and report concerns
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Rewarding potential improvement
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Visibility of key performance indicators (KPIs)
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The inclusion of positive risk behaviour within employees’ annual assessments
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Discussion of key learning points from incidents
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How are we doing ?
Finally, considering the following questions may be valuable
To what extent is the culture of my organisation inhibiting a best
practice approach to risk management?
Where are the blocks and why do they exist?
How do I instil a culture to embed rigour and robustness into
assessment and management of risk
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