The Risk Governance For Directors booklet sets out the major aspects of effective risk leadership and includes; tools and examples of a whole of organization integrated risk governance framework that will foster responsible risk taking and empower opportunity taking. The booklet asserts that the role of the Board is Risk Governance and Risk Management is the job of the CEO. Risk Governance focuses on only those enterprise level risks that can adversely impact the organisation.
This is a new concept in risk leadership. In addition, the Risk Governance booklet asserts that the starting point for an effective response to risk is the need to replace risk management with risk leadership.
Risk is where, despite expertise and diligence, adverse events, including missed opportunities, still occur due to factors such as external events or human error. In recent years there has been significant learning in a wide range of organisations on how to respond to risk. For example, many organisations have discovered that their first efforts at risk management have added limited value and in some cases have increased risk. The fundamental challenge in Risk Governance is how to adopt an approach to risk that makings thinking and feeling risk as a normal part of business activity.
There are multiple existing definitions of risk. Risk is defined by the Australia/New Zealand Standard for Risk Management as “…the possibility of something happening that impacts on your objectives. It is the chance to either make a gain or a loss. It is measured in terms of likelihood and consequence.” The Risk Governance booklet adds two additional stages to the model being response and recovery as both have been shown as vital in a comprehensive approach to risk leadership.
What all known risks have in common is that if the risk is identified and responded to early the potential to reduce likelihood and impact may increase significantly.
The author, John Mero, has worked extensively in risk governance with Board’s and management teams of for-profit, not for profit, defence, and government agencies and draws on decades of learning to synthesise the latest lessons in risk governance into a comprehensive quick read booklet.