The Current State of Risk Management

risk

Are You Part of the 22%?

In our latest blog post on Risk Management, we talked about how risk is really about uncertainty, an uncertainty that if it occurs could affect one or more of your objectives.

It is important to remember risk can be both good and bad. Your goal should be to understand how risks can affect your objectives.

For the past nine years, North Carolina Poole College of Management (Enterprise Risk Management Initiative) in partnership with the American Institute of CPA’s has published an annual report on the state of risk oversight.  In 2018, there were 474 respondents including 103 not-for-profit organizations.  The findings of the 2018 report mirror our assessment that we are living in a period of unprecedented risk as indicated below.

  • 60% believe the volume and complexity of risks is increasing substantially
  • 65% faced an operational surprise in the past 5 years

With the information gathered from this study it would appear that most organizations are well advanced when it comes to risk management.  But this is not the case.  The annual report on the state of risk management also revealed the following:

  • Only 22% of respondents described their risk management as mature or robust
  • Less than 20% of respondents saw their risk management efforts as providing strategic advantage

The above reflects our own experience working with hundreds of associations, not-for-profits, and smaller businesses.  Too many do not pay enough attention to risk management, and far too few don’t get enough value from doing so.  We’ve heard numerous excuses or assumptions as to why:

  • Risk management is too complicated
  • Only big organizations manage risks
  • It’s too expensive and we don’t have the time
  • We just don’t know where to start
  • Too many people on my board feel intimidated when we talk about risk

Do you need to improve your risk management or don’t know where/how to start?  You are not alone. Investing your time and resources in risk management can provide you with a competitive advantage. Proper risk management can increase the probability of reaching your objectives and prepare you for things that could go wrong.

In our next risk management post, we will provide you with six questions you can immediately put to use in your organization and get started with or enhance your risk management.

 

 

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Francis Liska
CEO OTUS Group | OTUS Group
Francis is a Chartered Professional Accountant, Certified General Accountant, Certified Information Systems Auditor, Certified Internal Control Auditor and a Certified Management Consultant. He holds a degree in Business Administration from Cape Breton University and a Post Graduate Diploma in Applied Information Technology. He has also completed graduate studies in decision analysis at Carleton University.

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