Traditional risk management doesn't work

Current research suggests that traditional risk management practices involving risk registers and software packages like Microsoft Excel might not be very effective anymore. Events over the recent years, e.g. 9/11, the financial crisis, or the nuclear disaster in Japan, have shown us that current risk management tools are insufficient to cope with (future) undesirable events.

Effective risk management is mainly about people and communication. Hence, we may need a more “human” approach to managing risks which focuses on raising risk awareness in organisations and engaging the key parties in analyzing and managing risk. We could call this Collaborative Risk Management.

Read about how Collaborative Risk Management has worked in practice in this article.

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Comment by Risk Culture Builder on March 6, 2016 at 5:19pm

No two people will respond the same way to a situation of risk, the way any person responds to risk is influenced by a number of factors, the main ones are:

• Nationality & culture
• Childhood experiences (and formative environment)
• Work ethics, trust & honesty
• Education (and the way it was obtained)
• Work experience
• Religion and other spiritual thinking
• Attitude towards life (and death)

Risk practitioners generally failed to address these underlying human aspects. Since the publication of the Basle accord, ISO 31000 and other standards and regulations, it has often been argued that compliance with these standards and regulations will mitigate and control risk, but this is only true if the standards and regulations are embraced in an effective Enterprise Risk Management Culture. Just like the policies, procedures and systems, these are worthless if human attitude, acceptance and desired response lack.

Addressing the aspect of people risk is the only way an organisation can improve the results of how their people respond to a situation of risk and the effectiveness of their risk management function. No organisation can ever have a perfect risk management culture, but organisations can achieve a level of maturity where they have an effective risk culture process and every employee is risk-minded and does something on a daily basis to mitigate, control and optimize risk

More here: https://blogs.zawya.com/Risk%20Culture%20Builder/120722113510/

Comment by Risk Culture Builder on March 6, 2016 at 5:17pm

Now BCBS also sees that, it's not about the models! http://www.bis.org/press/p160304.htm

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