Although risk identification is a fundamental tenet of ISO 31000, from the GFC to Brexit traditional methods have spectacularly failed. Neural Network mapping is the first real technique to actually identify risk drivers and their outcomes.
Enterprise Compliance Today
Just like the Brexit win 2 months ago, Donald Trump’s election as US President beggars belief but has some valuable lessons to learn from both a Risk Management and corporate governance perceptive.
I have often written on my view that there is an over emphasis these days on Black Swans in risk management. The Brexit vote on Thursday not only shot shockwaves through financial markets but has created a whole new paradigm to world economic stability both short and long term. And if Risk is defined as uncertainty then as of today, this must be one of our greatest risks.
An effective Corporate Risk management system (or ERM) requires developing a detailed inventory of all the drivers and influences and how they affect the organisation. It requires a methodical and introspective commitment to fully understand what makes things tick, but as with most things, a bit of effort upfront produces a lifetime of benefits.
With the recent release of a new British standard BS 65000 on Organisational Resilience, and COSO’s announcement of a review of its 2001 COSO ERM framework, I believe that business is moving ahead of ISO 31000 as a necessary response the evolving business environment and accelerating rate of technical change; therefore there is a strong case for a taking a fresh look at ISO 31000.
In the last decade we have seen the evolution of Risk Management from an administrative practice to ERM for corporate governance. But the realization that results come out of action not protection, has started people pursuing a more proactive role for risk management.
It is customary at this time of year for most risk professionals to step back and take a broader look at the risk landscape ahead for the coming year. The normal starting point is the “think-tank” assessments of Global Risks such as Zurich Risk Landscape 2007-2015 and the WEF’s 2015 Global Risk Report. And Global Warming is at the top of most experts’ lists.
In part 2 of my analysis of the ISO 31000 forum on “Does anyone really understand Emerging Risks?” I look at the 3rd question: How do you manage the unknown?
I recently opened an ISO 31000 Forum discussion on “Does anyone really understand Emerging Risks?” The discussion proved illuminating so in this week’s post I thought I would share a summary of the forum discussion.
Risk exists everywhere - the problem is knowing what to focus on. ISO31000 definition of risk as “the measure of uncertainty in a situation” hasn’t done a lot to clarify what corporate risk means for Directors providing "good corporate governance".