Efficient financial risk management

Author:Tanya FREE, KPMG



Keywords:risk, management, leader, strategy, performance

Getting started on creating an enterprise risk management program with a clear and practical vision is critical.\r\n\r\nIn order to support sound strategic decision-making, corporate and financial management must have information and processes in place to make “risk-informed” decisions. Such processes are vital to linking risk management to strategy, enabling companies to shape the strategic direction of their business and allocate scarce resources to attain growth that is profitable, in real and economically viable terms. \r\n\r\nExecuted properly, the enterprise risk management is a structured and disciplined approach that aligns strategy, processes, people, technology and knowledge. Its effective implementation provides the much needed “glue” that delivers a performance based focus on risk management. It may also provide evidence to stakeholders that the business is steadily improving its risk program. \r\nHowever, a performance-based focus on risk management relies on an organization understanding the root causes of the key risks facing the business. That process starts with identifying all risks and the values attached to those risks — and some risks are acceptable. Once identified and rated, a program can be put in place to monitor the risks, helping management to avoid being surprised.\r\n\r\nAs enterprise risk management`s practical applications evolve, corporate and finance executives have learned that this approach can help organizations with two critical challenges: to derive tangible value from regulatory compliance efforts and to link risk and strategy to drive business performance and enhance the organization`s brand.\r\n\r\n