Page 35 - Risk Management Bulletin Jan- Mar 2022

RMAI BULLETIN JANUARY - MARCH 2022

responsibility of many groups within the organization. the inventory of key risk exposures potentially affecting
One of the trends we see related to risk management an organization's ability to achieve its objectives.In
is, the role played by treasury dept. Treasury is coming days, Board would expect that an effective ERM
becoming more of a business partner, working with process will be an informative tool for them to execute
business units and across functions to ensure that sound their strategic plan.
decisions are made, particularly in the realm of financial
risk management.
#6: Focus on emerging risks
Many organizations do no formal assessments of
Today treasurers are moving away from merely focusing
emerging strategic, market, or industry risks.
on liquidity issues to becoming more strategic for the
Organizations need to be more proactive in integrating
organization. They present to Board, work closely with
emerging risks into daily business operations. It's not
top executives, business unit heads, Procurement etc.
enough to focus only on those events for which the
to increase the overall organizational risk intelligence.
probability of occurrence and likely impacts can be
For example, corporate treasurers are working with
identified. Risk assessment is largely inward focused as
Procurement for commodity risk management to
compared to being forward looking and externally
mitigate risks beyond Procurement driven supply chain
focused.
negotiations with vendors that can adversely impact
margins due to supplies price fluctuation.
Detailed analysis of competitor strategies/
benchmarking and scenario planning are not widely
#4: Risk Analytics: data-driven risk
used. Organizations now have started evaluating the
management "unknowns" by identifying exposure and correlation
One of the emerging trends in risk management is Risk between external trends and risks that could ultimately
Analytics i.e. use of advanced analytics and data mining result in a catastrophic impact on their own survival.
techniques to achieve risk management objectives. Some organizations use scenario planning and stress
Organizations are increasingly focused on using a data- testing extensively in their risk assessments to
driven approach for unlocking the maximum amount objectively evaluate impact due to emerging risks.
of information hidden in their data to effectively
manage their risks.
#7: Increased regulatory compliance
requirements
The key benefits of risk analytics are the ability to
expand risk factors to include granular specifications Organizations across the globe understand that
which provide a more holistic and factual basis for risk regulatory compliance is an important and critical
management. Additionally, it can be used to concern. As the regulations change, there is a greater
supplement behavioral scorecards with predictive focus on transparency and an increased risk of non-
models to analyze transactions in order to further refine compliance. Compliance to Dodd-Frank, IFRS, Basel III,
and enhance early warning signs. etc. influence organizational decision making. Going
forward, compliance to newer or changing regulations
#5: Increasing role of Board in defining will be a critical component driving risk oversight within

risk management strategy an organization.
Boards are demanding an integrated view of risk across
The inclusion of risk management into the mainstream
the enterprise. Enterprise Risk Management (ERM) is
helps the organization play more offensively. Businesses
an adoption of a holistic approach to risk management.
are beginning to look at risk management as a value
ERM is different from traditional approaches that focus
add rather than simply protecting the business from
on risk oversight by managing silos or distinct pockets
risk. Successful organizations view risk management as
of risks.
a strategic component of their value chain, delivering
ERM emphasizes a top-down, enterprise-wide view of long-term sustainable growth and innovation.

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