How to Direct a Risk Team

Organizations sometimes struggle to structure their risk management processes in a manner that is sustainable and value-adding. Often what they create fails to deliver robust risk information useful to running the business because they make the process overly complex or they fail to position it from a strategic perspective. A recent CFO.com article, authored by Alix Stuart, highlights findings from a Booz & Co. study which found that “more than 60% of [shareholder] value lost over the last decade has been attributable to strategic risks, like being in the wrong market with the wrong product.” However, the article notes that few risk management programs focus on strategic risks such as “being in the wrong market with the wrong product”. The article highlights that one way CFOs can successfully lead risk management is by initiating a companywide program that adopts a common risk framework and encourages two-way open communication about emerging risks.