Page 88 - Risk Management in current scenario

responses "Acceptance of risk", "Avoidance of risk", "Transfer of Risk" and
"Mitigation of Risk". This is followed by preparing an action plan for all
the risks that are going to destroy the success of the strategy and
mitigating actions should be documented. The identified risks should be
monitored during the strategy execution stage and reported to the Board
regularly. Any change in the emerging environment during the execution
phase should be followed by re-looking into the strategic goals and
reworking them as time may warrant.

In the modern organizations, particularly in the developed market, risk
management is more developed; one, due to regulatory compulsion and
second, due to organizations burnt their fingers during different global
crisis and understanding know the need of risk management, adding
value. In those markets, risk management is getting embedded into the
working of the organization and more developed compared to developing
markets. However, even in those markets, risk management is part of a
business planning cycle, strategic risk management is still in the
development stage. What is the difference between enterprise risk
management embedded in the business and strategic risk management?
This means that though the risk management framework is there for the
short term framework (on annual basis) but not fully embedded on long
term basis say up to five years or more depending on the time horizon
of strategy. That is one of the key reasons that 70% of all failures are due
to strategic risk.

Application of risk management

The methodologies for addressing the strategic risks are not too different
from addressing the enterprise-wide risks. All the tools and techniques
used to treat any risk foreseeable in six months or one year time is applied
for the risks foreseeable over five years time. The difference comes in
agility for addressing the risks for five years as compared to risks in six
months. The Company needs to be agiler while addressing the risk over
a longer period due to likely change in the external and internal

86 | Risk Management in Current Scenario