Page 17 - Risk Management Bulletin April -June 2021

RMAI BULLETIN APRIL TO JUNE 2021

important that organisations need to review its
risk, identifies its Key Indicators (KI) along with
processes in the fast-paced technological changes thresholds and communicates roles and
coupled with major shifts in operational functions. In
responsibilities. Pilot run is initiated.
this scenario the losses in the past may no longer be
an indication of future. It is a widely accepted premise
Step 2: Result Management: The validation of results
that you cannot manage identify assessment is carried out. Future course of action is based on the
integration monitor and refine mitigation what you pilot run results and initial feedback. In this stage
cannot control, you cannot control what you cannot implementation of the required supporting activities
measure, and you cannot measure what you cannot for deployment is also done.
define.

Step 3: Execution: Deployment of the risk assessment
Assessment & Integration: The next is the plan and continuous, monitor and refinement leads to
assessment stage: identification and assessment are risk acceptance and reduction.
two faces of the same coin; here we prioritize and
assess the risk impact. The aim is to have a common Some factors to keep in mind while using the approach
methodology i.e. integrating action. The idea of could be
common methodology can be supported by 1) How well does it fit with the existing risk
standardizing the scales used to determine the management strategy?
likelihood and impact of the risk. For example, what
2) How can the pilot be designed to deliver results?
would the reputational impact be on a scale of ten, the
frequency of the occurrence, complexity, nature, or 3) Who would be accountable for the results?
the volume. The company could set a metric around 4) What are the timelines i.e. when do we switch
all these parameters to have a comprehensive phases?
assessment plan. Some of the benefits to this could be
5) How flexible is the organization to changes?
a comparable view and consistent understanding
leading to removal of duplication in activities. Some
organisation tend to adopt the trifecta model which Monitor and Refine: The central activity here is
deals with three major steps i.e. creation, result reporting assessment outcomes and trying to refine
management, execution as shown below : them, this structure is based around monitoring and
Step1: Creation: The organisation outlines its scope of refining the results of control assessment and residual
risk assessment and is one the most
critical activities because when it
comes to risk management one has
to constantly refine the strategies
with the updating problems or
changes. To refine any process we
need to establish a proper reporting
system. The final step is risk
mitigation and improving upon the
gaps and the limitations.

Limitations of Silo

Approach:
At present, organisations are
adopting a silo approach to non-
financial risk which has its limitations:

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