Page 9 - Risk Management Bulletin April-June 2022
P. 9

RMAI BULLETIN APRIL - JUNE 2022


             engaging stakeholders are many and include a better  Effective tone at the top is a prerequisite to a
             understanding of the risk, building trust and credibility  commitment to continuous improvement that is so
             as stakeholders feel involved in decision-making and  essential for risk management to function effectively.
             actions affecting their future, stakeholders feel that
             their interests are taken seriously by the organization.  A leadership failure and the organizational “blind
                                                              spots” that contribute to dysfunctional behaviour will
                                                              almost always undermine even the strongest risk
                                                              management capabilities.

                                                              An organization’s culture can have a huge impact on
                                                              its ability to prevent the occurrence of unacceptable
                                                              risk events and identify new and emerging risks in a
                                                              changing operating environment.

                                                              Tone at the top is a balance between creating and
                                                              protecting enterprise value. For example, if
                                                              management’s focus is always on the short term, i.e.,
             Engagement generates mutual understanding and    the next month or quarter, the organization could end
             sharing of responsibility if things go wrong. It also  up undertaking risks that
             allows risk stakeholders to express their opinion on the  mortgage the future.
             risk and the actions taken by the organization to
             address it, as well as its potential outcome. Engaging  3. Communication
             with a variety of stakeholders provides a platform for  A risk manager’s job is to evaluate risks, of course –
             different voices to be heard. Different risk stakeholders  but communication of these findings to board
             can be consulted at different stages of the risk  members, senior management and others is crucial. In
             management process.                              fact, without effective and thorough communication,
                                                              a risk manager’s role is worthless to a business.
             In order to engage appropriately with the stakeholders,
             the organization needs to know who they are, and how
             they are involved. The following simple steps can be
             undertaken  to understand, map and plan risk
             stakeholder engagement.
             Y   Identify and analyse risk stakeholders
             Y   Prioritize risk stakeholders
             Y   Plan risk stakeholder management
             Y   Risk stakeholder engagement


             2. Tone from the Top



                                                              Without effective communication that helps stakeholders
                                                              understand the output and consequences of certain
                                                              actions, an organization will almost certainly undergo
                                                              more harm than good. In fact, most business crises are
                                                              not linked to a lack of information or understanding but
                                                              a failure to effectively communicate risk.

                                                              4. Clear Risk Management Policies
                                                              The purpose of the risk management policy is to


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