Manage Tomorrow's Surprises Today

Steven Minsky

Where Do Risks Come From? Risk Assessment Mistakes

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The Harvard Business Review's article "How to Live with Risks" reveals a common misconception that risk managers have about the sources of their risks, and how they should be conducting risk assessments.

This study suggests that while risk managers spend nearly half their time on legal and compliance related risks, they face a much greater threat of loss events from strategic and operational concerns.

 

risk assessments are identifying the wrong risks. Adopt a risk-based methodology to enact better enterprise-wide risk assessment processes.

A common risk assessment mistake is the inability to relate high-level strategic concerns to the particular risks identified at the supervisory level of the organization. While higher-level interviews add value by revealing concerns and goals of senior management, your executives are several layers removed from the risks that effect day to day operations. The best strategy is to get feedback from as many front line individuals as possible, and then aggregate their concerns and assessment scores up to the strategic goals outlined by management.

The result is a more contextual risk assessment process that can be used to develop strategic and board-level dashboards that help prioritize resources and mitigate risks effecting your organization's most important goals.

 

Interested in improving your risk assessments? Download our eBook, 5 Steps for Better Risk Assessments, or use our customizable Risk Assessment Template for Excel.

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In this blog, risk expert Steven Minsky highlights the differences between traditional risk management and true enterprise risk management, which is about helping things happen rather than preventing them from happening. Manage Tomorrow's Surprises Today is designed to help you think about risk in new ways and learn how to benefit practically from this rapidly evolving field.

Steven Minsky

Steven Minsky is the author of the RIMS Risk Maturity Model for Enterprise Risk Management and CEO of LogicManager, the recognized leader of enterprise risk management solutions. LogicManager provides an integrated, intuitive software-as-a-service platform that helps companies make better decisions through risk intelligence for more effective corporate governance, risk and compliance management.

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