WILSON's View on Risk Management

ERM is powerful when designed as a performance-focused activity. It's not an audit, nor a compliance process. ERM manages the barriers that prevent organizations from achieving their objectives.

Author:
Richard Wilson develops Performance Risk Management capabilities for complex organizations. He has helped the largest companies in North America manage the barriers to their desired performance.

richard.m.wilson@ca.pwc.com | (416) 941-8374

Tuesday, January 3, 2012

ERM Challenge Series: #4: Risks as Events; The Importance of Documenting your Risks Correctly

ERM Challenge #4: Risks as Events; The Importance of Documenting your Risks Correctly

ERM Objective:
Draft risks that are easily understood, unambiguous, and interpreted the same way by all who view them.

The Trap:
A majority of companies create confusion or frustration with their ERM program by drafting risk statements poorly. Risks beginning with the following phrases are not risk events, and will result in a frustrated group of executive risk assessors and risk owners:

  • “An inability to…”
  • “…leading to…”
  • “And / or”
  • “A lack of…”
  • “…as a result of…”
The Solution:
X May Happen:  This process is intuitive and the outcome is a risk register that is easily interpreted by all of your stakeholders. It is as simple as “X may happen”.

Another insight – your risk register should not contain a risk such as, “Reputational damage may occur”. Reputational damage is a component of your Impact assessment. Over half of your risks can lead to reputational damage, so don’t consolidate all reputational considerations into just 1 risk.
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About The Author

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Richard is a Director in PwC's Risk Advisory practice with clients in both Canada and the United States.

He is an experienced senior executive with 15 years in a CEO or COO role (publically traded and private firms). Richard has been leading risk management implementations for more than a decade incl. 60 C-level risk assessments, and has led online risk assessments for 30,000 people in 25 countries.

He has advised the largest company in the US on risk management, and he has facilitated a risk assessment for the United Nations. Richard has been published in Compliance Week, Canadian Business, and the Globe & Mail and has been a keynote speaker on the topic of risk at many conferences in both Canada and the US since 2004.