The corporate battlefield is littered with little risk bombs these days, isn't it? New regulation, data protection, network security, economic recovery … it's a mine field out there, and every step brings considerable risk.
If you plan your route and know what to look for, though, mitigating that risk gets considerably easier.
That seems to be the message from the Committee of Sponsoring Organizations of the Treadway Commission, or COSO. In a new report titled “Strengthening Enterprise Risk Management for Strategic Advantage,” the panel says aligning risk management with strategy will strengthen an organization considerably.
“Management is often being asked to provide their boards with more information regarding key risk exposures,” said COSO Chairman David Landsittel. “The challenge facing management is designing and implementing an enterprise-wide approach to risk management that is both strategic and value-adding so that the board and senior management have a rich understanding of the organization’s top risk exposures.”
The report focuses on four areas in which a company's senior management and board members can work together to mitigate risk:
- Discussing risk management philosophy and risk appetite.
- Understanding risk management practices.
- Reviewing portfolio risks in relation to risk appetite.
- Learning of the most significant risks and how to respond.
Align risk management with strategy? Doesn't exactly sound like rocket science, does it? Then again, an awful lot of companies have been taking part in an awful lot of risky behavior these days. Maybe the COSO paper is the perfect reminder at the perfect time.
Read the paper in its entirety, then check out these additional resources:
- Keep taking those risks … but carefully
- Risk management: Do what's right and you won't go wrong
- MACPA virtual seminar, Nov. 18: Enterprise Risk Management in Personal Wealth Management
- MACPA virtual seminar, Dec. 2: Enterprise Risk Management in Innovation and Learning Initiatives
- MACPA virtual seminar, Dec. 16: Enterprise Risk Management in the Health Care Sector