By Guilherme Barbassa – CEO Actio

The impact of misalignment between risks and strategy

I’ve worked as a consultant in enterprise risk management and strategy execution, and I’ve seen firsthand how these two areas often fail to interact properly. It has never made much sense to me. The processes, departments, communications, and technologies that support these functions 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. 

For this reason, I believe it’s critical to have a comprehensive understanding, support, and communication from the highest levels, including the board, investors, and senior management, about how the risk management process aligns with the organization’s strategic objectives. This provides purpose and motivation to everyone involved, ensuring consistency and persistence throughout the process.

The importance of strategic clarity

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 questions: “What is our strategy?” and “Does everyone in the organization know it?” If not, steps should be taken to ensure that everyone understands it. If you don’t know what your strategy is, how can you map the risks? It is comparable to participating in a high-performance competition without understanding the proper training required or the unforeseen variables that can impact performance.

Risks as opportunities and their impact on results

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. With an integrated approach, they have already identified potential risks and put a contingency plan in place. Additionally, 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.

Integrating risk management and strategy is not just a trend; it’s an essential action for companies navigating today’s complex business landscape. Your commitment to this transformation could be the key to unlocking your company’s full potential in the years ahead. 

The Solution

For this action to become a reality, it is essential to have a system that supports both areas. In this regard, Actio’s corporate management platform can assist you.

It is a powerful tool that strengthens risk management and internal controls by automating self-assessments, audits (ISO and ONA), and the handling of non-conformities, with customizable checklists and monitoring of corrective actions. Major organizations such as Hospital Alemão Oswaldo Cruz, Unimed, Copasa, and TRF already use it to enhance their risk management.

On the other hand, Actio’s corporate management platform can also assist you by providing complete control over information, goals, and actions, while integrating risks and strategy.

For any questions, suggestions, or clarifications, please send an email to: [email protected]