The global financial crisis brought to light how big a role risk management plays or should play in corporate strategies.
However, over a decade later the data is not supporting any of this. Big banks are still not getting the message – that risk management is imperative to stopping systemic risks from impacting society as a whole.
Wells Fargo is a great example of such a blunder which resulted in a complete loss of public trust. However, the company has said they are ‘re-established in 2018,’ I do not know how many people actually believe this.
In institutions where greed can cloud the mind and be as contagious as the winter flu, risk management is needed not as a stand-alone check the boxes function, but one that instills risk awareness across the entire enterprise.
Risk behavior within an organisation can never be changed if Enterprise Risk Management is viewed simply in place to meet legal and regulatory requirements to conduct business. It must be ingrained within the fibers of every inch of the company, from the lowest levels to top leadership.
Only then can a risk awareness culture flourish that takes Enterprise Risk Management from a stand-alone silo to an enterprise-wide tool which increases decision-making quality and intelligent risk taking.
The main goal of Enterprise Risk Management, one that many overlook, is to help organisations meet strategic objectives by managing the uncertainty that follows every action towards those goals.
This is where risk management turns from a stand-alone cost center to a value-add decision-making tool which aids in the achievement of objectives.
Looking at Enterprise Risk Management in any other way, can be simply foolish.