The golden rule of risk management – the simpler it is, the more transparent and easier it is to understand and implement!
The Risk manager’s goal should be helping organisations become more risk-based. Risk management tools and methodologies should be clear to the rest of the organisation and easily adaptable in the normal course of doing business. Otherwise, risk managers are likely to meet a lot of resistance or be simply ignored, which is even worse.
Risk managers need to speak the business language and avoid the risk management jargon when dealing with the business. The use of the terms VaR, EaR, CFaR may be perfectly acceptable to communicate with the CFO, but the Head of production will very quickly lose interest. Even the most basic terms like risk profile, risk mitigation, risk owner, risk assessment are unnecessary and completely avoidable.
HERE IS A QUICK CHECKLIST TO TURN THIS SECTION INTO ACTIONS
|Regularly sanity check your risk management methodologies. If they are not understood by the business they will not be adopted|