riskmanagement (36)

Undoubtedly, the current global contingency has shaken the operating model of companies in various sectors. This confronts us with a reality previously unthinkable for many of the businesses that had not developed sufficient capacities. 

From a business perspective, the impact of the pandemic has left companies in various positions: 

  • Businesses that have suddenly lost relevance and even viability. 
  • Sectors with unstable structures and vulnerabilities that are sustainable in the short term, and
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The management of risk is coordinated set of activities designed to manage and protect a company against potential threats, whatever their involvement, this entails planning and use human and material resources to minimize risks or treat. 

It is a strategy that involves the preventive work of anticipating possible situations and considering the practice as part of the company's processes, but it also includes acting in a prescriptive way, that is, when the risk manifests itself without having b

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Understanding Risk Management

According to the ISO 31000 standard, risk management is the process that allows companies to identify, analyze, evaluate, and take action to control the risk situations to which they are exposed. These are adverse events that interfere if materialized, they hinder or affect the achievement of the objectives and can represent damages and losses. 

Simply, risk management is a codified way to mitigate the risks that will harm the future of the company. Every action we take has an inherent amount of

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GRC tools have truly come of age in the past few years. There was a time when GRC solutions were clunky pieces of software which were hard to implement for businesses and cost millions of dollars to implement. Even though these solutions were so complicated, they did not really provide too much of a benefit and were only beneficial for very large businesses which had a lot of governance, risk, and compliance workloads. However, like all technologies, the price of GRC solutions has gone down, and

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Regulatory change management is a critical process for any business operating in an industry that faces regular changes in federal and state level regulations. Most businesses do not have to worry about regulations too much, but those that operate in industries where the government periodically changes the rules need to make sure that they have the capability to adapt with the changes occurring in the regulatory framework.  

Managing regulatory change requires knowledge and experience in understa

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Improving risk management for third parties has been a constant concern of compliance officers in their work as responsible for an anti-corruption program. At the beginning of each year, the results of the management are evaluated and some organizations make great efforts to improve the risk management of third parties, it cannot be hidden that third parties are increasingly posing greater threats. 

For this reason, we believe that it is a good idea to share here a series of suggestions to improv

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A New Era of Risk Management

There is no doubt that traditional banking, both in Latin America and in the rest of the world, has played an important role in credit risk management. However, implementation and performance models have lagged behind the application of new, more effective technologies. While fintech and online companies process loans without collateral, requesting few documents and in five minutes, banks are still adapting to this reality. For these financial institutions should move quickly to use with big dat

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Finally I get stats 101

8219693079?profile=originalI don’t know if you have noticed, but I have been blogging about measurement, data, and statistics for the past 19 weeks. All to defeat quantifornication – the act of pulling numbers out of thin air for decision making. Numbers that are seemingly reliable but are not.

This week, Tuesday 10th November at 15:00hrs AEDT, I am presenting with my colleague Dr Andrew Pratley. Our presentation is Statistics 101 Applied to Controls – How to test and measure control resilience. Our presentation is part of

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Optify your advice

8219694066?profile=original“Provided with the freedom to choose, decision makers are likely to act more rationally and be more fully behind the decision.” Is how I finished last week’s blog.

Optifying your advice is delivering the freedom to choose in the optimum way. Your optimum way. And it follows the Rule of Three.

People like things in threes. Think of The Three Little Pigs or The Three Musketeers or Superman’s: ‘truth, justice and the American way’. Or ask Shakespeare’s Julius Caesar: ‘Friends, Romans, Countrymen’; or

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Hating Restraints

8219691475?profile=originalPeople mostly don’t like to be restrained. We also don’t like some constraints but we like others. For example, we like choice when buying but we don’t like too many choices.

Restraints on the other hand are an attack on our freedom.

Take seat belts for example. They were first invented the century before last! The modern retractable 3-point seat belt was invented in the 1950s. However, seat belt wearing was not compulsory and it took government legislation, regulation and enforcement to get more

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Beyond Nudging

8219692657?profile=originalSometimes you need to go beyond nudging decision makers. However, the personal risk you take when challenging a decision depends on culture.

Last week I was given cause to reflect on my time at HIH Insurance and the causes of its demise in 2001. While there were many, and people with different lenses could easily come to different conclusions, my view is that the culture did not allow sufficient leaders to speak their mind.

The CEO, Ray Williams, was a powerful personality. One of the most caring,

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Nudging the CFO

8028339277?profile=originalCan you make a difference with measurement if the culture of your organisation is one that does not respect, let alone crave data? In my experience it is tough to go hard against the grain of an organisation’s culture. The better way is to nudge it.

How might you nudge it? Culture change can start from outside the executive team but ultimately it has to be adopted by a key executive and then the whole executive. So no better place to start than with the strategic risks of your organisation.

How do

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Getting under the skin of Mr Assume

8028335696?profile=originalBack in 2015, McKinsey published a paper on the future of risk management in the banking sector. At the time I sent it to many of my clients in other sectors because of its very important messages, including this one in their summary:

“Bank risk management will likely look dramatically different by 2025, when it has become a core part of banks’ strategic planning, a close collaborator with business heads, and a centre of excellence in analytics and de-biased decision making.”

The paper includes co

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Early indications are …

8028333875?profile=originalWhere should your lead indicators (KRIs or Key Risk Indicators in the field of risk) come from?

A few years ago my colleague Andrew Prately and I toured the country to speak at Chartered Accountants Business Forums. We spoke on KPIs – Key Performance Indicators. We talked about lead and lag indicators and we talked about limiting the number of KPIs, as having too many creates its own industry of measurement and reporting with very little influence on decision making. Because more often than not o

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Data problems are not the real problem

8028338883?profile=originalMy colleague Dr Andrew Pratley and I are on a mission to defeat quantifornication. Last week we ran the first of two free interactive webinars we are running to explore the topic. We had attendees from a range of industries including banking, emergency services, energy, insurance, health, policy agencies and regulators from federal and state governments, local government, engineering consultants, risk and cyber risk consultants, IT service providers and many more.

Everyone was there for the same

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Finding directionality

8028330463?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Last week was supposed to be our final blog we are co-writing but we couldn’t resist sneaking in another one after the great response from our last one.

Last week we wrote about the concept of directionality, taking what you know having applied the three-question framework and testing with more data to gain even more certainty of your decisions. We defined directio

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When uncertain, seek directionality

8028335274?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the seventh in a series we are co-writing.

Nothing is certain. Not even death and taxes. Because the only certainty is uncertainty, there’s no foolproof way to make the right decision. Most organisations deal with this by putting in a time constraint. Forcing a decision, however imperfect it may be.

While keeping the organisation moving by forcing decisions

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Testing Relationships

8028329290?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the sixth in a series we are co-writing.

Relationships are the branch of statistics that describe how one thing influences another. We know these as regression analysis, x-y plots or scatter plots. The classic regression plot involves a line of best fit. We tend to think that the better the line of fit, the better the statistical relationship. That’s true,

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Taste Testing Quantification

8028334495?profile=originalMy stats guru colleague Dr Andrew Pratley and I are on the move to tackle Quantifornication, the plucking of numbers out of thin air. Here is the fifth in a series we are co-writing.

The story of statistics started with a question about differences. R.A. Fisher set out to test if someone really could taste the difference between tea where the milk was poured in before or after the tea. Fisher’s experimental design was simple. Eight cups of tea were prepared, four with the milk poured before, four

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