Contemporary Risk Management
Activities at the corporate level are frequently influenced by various types of pressure. They can be external, such as compliance or regulatory changes. Often, events in one’s own organization or in the industry prompt an internal review of existing risk-management approaches and associated adequacies. However, we are witnessing an increase in CEO’s and business leaders taking a more proactive stance, as their goal is to further develop risk-management capabilities (proactively based on their strategic and economic priorities and growing aspiration levels) into a true competitive advantage—ultimately improving business decisions and increasing the value of the company in a risk-conscious way.
Our staff and consultants have worked with clients in many different industries, including finance, energy and basic materials, automotive, pharmaceuticals, infrastructure, logistics, and NGO’s.
Our recent work includes supporting clients in targeted initiatives for upgrading risk-management capabilities. Open hostilities (Civil war) motivated our clients to work with us on risk-management, business delivery and rapid-recovery programs (Business continuity). Natural and operational obstacles resulted in the creation of an effective crisis-response projects. Far-reaching and supervisory actions triggered work to articulate strategic risk appetite and strengthen internal-control frameworks.
We focus on strengthening the structural elements of risk-management, including the link between risk and strategy, for example, in identifying and managing risks to logistics & supply-chain and physical facilities; the impact of risk-return on portfolio management and operational “de-risking”; and the strong link between risk and financial management, such as balance-sheet management.
Many boards and CEO’s have asked us to discuss risk governance as it relates to their companies, including the roles and involvement of the board and the CEO in risk management. Also, many of our projects now focus on ensuring that risk-management is implemented in and across an organization, including within a company’s culture.
Our systematic approach to risk-management focuses on five dimensions, each of which is substantiated with industry-specific diagnostics, benchmarks, and best-practice recommendations
Risk-return transparency and insight
We help our clients identify, quantify, and prioritize their most important risks as well as related returns. We do this using a combination of local intelligence and quantification methods and the systematic integration of qualitative factors, including business-management judgment.
To complement validated approaches, we integrate forward thinking, especially in risk measurement and management reporting. In close cooperation with our back-office staff, we advise our clients on appropriate data and IT solutions. As a result, our clients gain a clearer perspective of their most important risks and the related returns, as well as on the structure of their portfolio of risks and how they can use insights in order to improve strategic, financial, and operational decision making (for example, on risk mitigation, production and business delivery adjustments or contracting).
Risk ownership and strategy
Corporations should choose consciously what types and levels of risk to take and what to avoid and mitigate (“risk ownership”). We help clients gauge their unique strategic, financial, and operational circumstances (“risk bearing capacity”) in order to ensure that their risk choices are aligned with their strategy and with their financial and operational risk-taking capabilities (“risk strategy and risk appetite”), so that they can optimize the risk-return trade-off
Risk-enabled decisions and processes
When making important strategic, financial, and operational decisions, decision makers must consider risks related to information and associated trade-offs. We support our clients in integrating risk-return-related considerations into important decisions. We pay particular attention to ensuring sound risk reporting, monitoring, and control processes
Risk governance and organization
Everyone in an organization has some responsibility in managing risk across the organization, not just the managers. Staff, shareholders, regulators, and often policy makers will request or mandate that companies involve their top management and their board members create the right structural and organizational choices, the description of roles and responsibilities, as well as the appropriate definitions of organizational units and reporting lines, which critical to ensuring robust and effective risk management. We help clients define overall governance as well as the organization of the relevant risk, finance, and other control functions, and determine how they should interact with one another and other parts of the organization. Furthermore, we can provide granular benchmarks on the appropriate size of and cost for different risk and control units
Mind-sets and behaviors of individuals and groups inside the organization play a crucial role in the execution of a corporation’s risk-management strategy. We develop a tailored approach to risk culture that allows for the creation of a specific and detailed description of the core elements of a corporation´s risk culture. We achieve this through an analytical approach toward measuring and profiling that culture, overarching industry-specific benchmarking, and the identification of specific levers for actively influencing and developing risk culture