As a risk workshop facilitator I get to assist many organisations assess risk to their key organisational objectives. Interestingly the outcomes are not always about risk treatments, often they are about reviewing risk appetite.
Situation One:
The results of the risk workshop show that three of five key strategic objectives have Extreme risk ratings. This may be due to one of two scenarios: Either you are an organisation that is on the edge of the cliff OR your risk criteria are simply wrong. If the latter, you haven’t expressed your risk appetite clearly. In this case, developing a risk appetite statement to augment risk criteria would help you to set the risk rating criteria more appropriately before the workshop.
Situation Two:
The risk workshop results in Low risk ratings for all your key strategic objectives. Again this may be due to one of two scenarios: Either your risk criteria are simply wrong where again development of a risk appetite statement to augment risk criteria will help OR you are “at risk” of being too conservative. You may need to raise the bar higher. On the other hand, you may be very content in your apparently low risk world.
The key point is that a clearly articulated risk appetite will drive people’s behaviour so you need to set it right to drive the behaviour you want to see.
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