Metric Stream for Data in my Workshops.

1.Define a single risk appetite taxonomy across the organizations, such that

everyone understands and reports risks in a common language. This

would help in board level comparative analyses across products,

processes, business lines and other organizational elements.

 

2. Break down organizational silos to create an integrated risk appetite

information repository. This would aid in the sharing of information

across the organization, increasing its capability to aggregate risk appetite

information and ensure that this information is representative of

every part of the organization.

 

3. Automate the risk management processes to ensure that all risk appetite

efforts are conducted in a timely manner and with sufficient rigor.

As an efficient risk appetite management program brings together reams of

information, automation helps in rationalizing efforts, thus reducing

cost.

 

4. Develop a strong risk appetite awareness program to supplement the risk

management process. This will help build a risk culture within the

organization.

 

A risk appetite management program with the above characteristics would be

capable of catering to the risk intelligence needs of the board. In addition,

risk appetite management programs need to provide strong and flexible reporting

capabilities, as the board needs risk appetite-related information aggregated at

multiple levels of the organization. Strategic decisions are never very

simple; therefore, the need to provide simple and clear risk appetite information

becomes paramount for quick decision making.

 

Executive dashboards are very powerful tools for visualization. The ability

to view risk appetite of data from multiple perspectives is also very important, since all decisions at the board level will involve more than one organizational

unit.

 

Though boards need to view aggregated information, there are many

occasions on which they will need to drill down further into the specific

details to gain a clearer understanding. Consequently, a risk appetite management

program is only as good as its capability to provide varied and intuitive

visualization of the risk information.

As we emerge from the financial crisis, risk appetite intelligence within

boardrooms will play a major role in deciding the fate of organizations.

Boards have the perspective necessary to leverage this risk appetite intelligence

to craft long-term risk appetite management strategies which, in turn, are critical

for sustainable and profitable growth. They have the power to ensure

that their organizations are not only protected against risks but are able

to thrive on risks. Therefore, boards must actively participate in and

collaborate on risk appetite management, realizing that risk appetite-related conversations in the boardrooms are here to stay.

 

Claudius Todor has been the president of learning solutions at

McGill. He has had a rich career in risk appetite management, and

has held several key operating roles at some of the largest global

organizations.

 

Most recently, prior to joining MetricStream, he served as senior vice

president and chief risk appetite officer at Xitech. 

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