What risk management tools and reporting systems can help stakeholders and executive management to make better decisions?
An often-asked question. And a hot discussion point. Because, influencing decisions is, as many risk managers have told us, the core value proposition of robust risk management.
But stakeholders and executive managers don’t always engage in risk in the same way that we, as a risk community, do.
They need impactful data. Information that links to their core strategic priorities. They need data that resonates. Information that is free of jargon. And it must be presented in a clear and easy-to-digest format.
All this comes before the real value in practically aiding decision-making can be recognised.
So, how do we get there?
We’ve placed this topic under the microscope. And our community of risk managers have shared new and interesting ways of garnering and displaying risk data.
Here are three brief examples – each one is further expanded upon and accompanied by tools and templates created by risk managers, in our Intelligence platform.
(Members: Access the Intelligence platform via the Member Portal here.)
1. Collect and map data on an ‘operational dashboard’
Creating a ‘dashboard’ can help provide a clear picture of the greatest risks and most effective solutions – in terms of monetary value.
Some have created their dashboard by using Excel or Microsoft Access – and tailored their dashboards to capture the most relevant data points.
Others have recommended tools and software such as SAP and services from SAI Global and BWise.
Consider mapping out the following data points:
- Risk and loss incidents: What are they? When did they take place? What was the cost of the loss? Who owns the risk?
- The mitigating solution: what are they? What resources are required? What is the cost of the mitigating solution?
- Budgeted KPIs, for example, is this increased productivity? Increased sales?
- Stretched KPIs
- How these KPIs will and should change over time
This should help teams to tangibly plot the long-term impact of risks and solutions to a company; and provide a picture on the cost of the risk versus the value of the mitigating solution.
2. Create a ‘dynamic’ risk matrix
The jury is still out on the effectiveness of risk maps and matrices. But one recommendation is to adapt traditional matrices by replacing the ‘linear axis’ with a ‘dynamic axis’.
A linear axis is unlikely to provide a clear picture on the financial impact of a risk and how they have evolved over time.
But changing the format by using a non-linear access, provides the opportunity to map out more variables – risk frequency, financial impact, and how risks have evolved, for example.
Data can go further by adjusting the axis. The impact axis for example, could go up in scale – small to material to catastrophic. These levels would translate into different monetary impacts depending on the unit completing the table.
3. Overlay a grading system on top of value trees
Mapping out the individual components of a business process – via a decision or value tree – can help focus attention on the areas that may result in large-scale risks.
For example, what components make up your management process – project management, hazard reviews?
Behind each block within the decision tree are a series of questions.
Under hazard review, for example, these may be:
- What sort of hazard is being reviewed?
- What sort of hazard review process does the organisation have?
- Is the organisation aware of its risk?
Build into the tree the following considerations:
- Severity of risks
- Likelihood of risks
- Mitigation processes
- Are there synergies in risk prevention methods?
Once these areas have been defined, overlay a grading system to help ascertain the risk maturity level behind each process.
We're setting out to transform how the global risk community shares insights and experience. You can read more about the launch of the Risk Leadership Network here.
Are you an in-house risk manager who could benefit from access to a global network of senior risk professionals? Talk to us about becoming a Member today.
