Risk Management Frameworks To Empower Business Decisions
“Adapt and overcome” is the unofficial catchphrase of the Royal Australian Navy (most likely inspired by the US Marine Corps’ similar mantra: “Improvise, adapt and overcome”). While these concepts of empowerment and quick thinking are essential for being battle-ready, it also applies to being agile in the business world, because nothing stymies progress like uncertainty and lack of structure. By utilising useful risk management frameworks, we can empower businesses to make decisions that align with the organisation’s objectives, whatever the scenario.
How Can a Risk Management Framework Empower Business Decisions?
It might sound counter-intuitive, but having a clear risk framework in place empowers individuals, teams and entire organisations to act more quickly. By knowing what your organisation’s risk appetite is, you can make faster decisions about what options are available to you, what risks the organisation is willing to accept, and how you can move past the current obstacle to ‘adapt and overcome’ whatever is thrown your way. You’re effectively empowering the business to be more agile, by clearly articulating the framework in which they should operate.
This doesn’t just apply to risk practitioners though, nor should it. By establishing a clear risk framework, and ensuring your business understands it, you empower the business to make informed decisions faster, safe in the knowledge that there are predetermined principles which underpin the approach they’re taking.
Changing Your Approach
When we know what boundaries and frameworks we’re operating within, we can approach situations in a positive light – seeing the opportunities, rather than the threats, in all situations. In this way, risk management frameworks empower businesses to become agiler – to stay ahead of their competition, by encouraging their internal stakeholders to go bravely into the world, acting without fear because they’re clear on the guidelines for operations and decision-making.
But this doesn’t just apply to reactive situations or addressing emerging situations with a threat/opportunity mindset.
By having a clearly defined risk management framework in place, businesses can proactively seek opportunities that align with their strategic objectives, and as long as these will fall within the defined parameters of the established framework, a sense of freedom and agility is encouraged.
What Do We Need to Do?
- Create a robust risk framework, and ensure this is clearly articulated
- Ensure the business understands the risk framework, and how it applies to their area
- Regularly review the risk framework, to ensure it is addressing evolving market forces and meeting business objectives
- Reward ‘good behaviour’, where appropriate risks are taken, to encourage seeking opportunities while operating within the risk framework
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