I worked as a consultant in enterprise risk management and strategy execution, and I witnessed firsthand how these two areas often do not interact properly. This never made much sense to me. The processes, departments, communications, and technologies that support these areas should be interconnected. But why does this not happen in many companies?
One of the main issues I observed in practice when not integrating risk management and strategy is a lack of motivation within the organization. This happens when the team doesn’t see how the risk management process relates to the company’s strategic objectives.
That’s why I believe it is crucial to have a comprehensive understanding, support, and communication from the highest level, such as the board of directors, investors, and top management, about how the risk management process fits into the organization’s strategic objectives. This provides a purpose and motivation for everyone in the company, ensuring consistency and perseverance in the process.
However, often, people in the organization are not aware of the company’s strategic goals or targets. This scenario makes it challenging to logically identify the risks or issues that may hinder the achievement of these goals.
To start, it’s crucial to answer the question: what is our strategy? Does everyone in the company know the strategy? If not, it’s important to take steps to ensure everyone understands it. If you don’t know the strategy, how can you map out the risks? It’s like trying to run a marathon or compete in a triathlon without knowing the risks related to your diet, training program, and obstacles that may arise in your path.
Moreover, it’s essential to understand not only what the strategy is but also why it was chosen. Risks are not just threats; they can turn into opportunities for strategic innovation. When risk management and strategy teams collaborate, it promotes a culture of proactive decision-making. Leaders can anticipate potential challenges, adjust strategies, and seize emerging opportunities in an agile manner.
Imagine a company facing a sudden market disruption, such as the COVID-19 pandemic. With an integrated approach, they have already identified potential risks and have a contingency plan. Furthermore, companies can adjust their strategy, adapt product lines, and even explore new markets to remain competitive.
The benefits are reflected in financial performance. Businesses that effectively integrate risk management and strategy tend to outperform their competitors. They achieve better financial results because they are better prepared to face economic challenges and seize opportunities.
But remember, integrating risk management and strategy is not just a trend; it is an essential action for companies facing today’s complex business landscape. Your commitment to this transformation may be the key to unlocking your company’s full potential in the coming years.
Belt by Actio is a powerful tool that assists in tracking actions, creating risk matrices, developing mitigation plans, and much more. Successful companies, such as Hospital Oswaldo Cruz, already use this risk management software to enhance their business performance.
On the other hand, Seed by Actio offers total control over information, goals, and actions. It is an integrated multi-methodology solution in a single platform, allowing effective integration across different areas of your organization.
These tools are essential to ensure that your company is prepared to face the challenges of the current business environment and achieve success in the future. Actio is committed to providing the necessary solutions to drive your organization’s growth and efficiency.Like the content? Don’t forget to follow Actio on Instagram, LinkedIn, and Facebook.