RISK-ACADEMY Blog

Description

This masterclass will cover practical ideas to identify, validate, develop and document risk appetites for different strategic, operational and financial business decisions.

Learn how the concept of risk appetite, risk tolerances and risk limits transitioned from financial services to corporate world and lost all its meaning along the way. Alex Sidorenko, author of the Guide to Effective Risk Management, will provide no-nonsense, practical ideas for turning risk appetite from an artificial and theoretical concept to a valuable management tool. A tool that the company management will want to use every day when making decisions. Together we will investigate the nature of business decisions, the ugly side of cognitive biases and conflicts of interest and how the application of risk appetite, risk tolerances and risk limits can help protect the shareholder value.

Join us to learn how to improve risk-based decision making, raise risk awareness and improve the overall corporate culture of the organization through the use of well-articulated risk appetite statements.

Learning objectives

• Understand the nature of business decision making and the concept of decision quality
• Learn how hidden agendas, cognitive biases and conflicts of interest impact on the quality of business decisions and reduce shareholder trust
• Learn practical ideas to identify and validate existing risk appetites set by the management
• Validate existing risk appetites against the risk profile of the company, the regulatory requirements and stakeholder expectations
• Learn a better way to design and document risk appetite than risk appetite statements
• Learn practical steps to improve the overall risk culture of the organization.

Course outline

During the two day interactive workshop we will cover:

• The history of risk appetite and why it failed as a tool
  • Consistent risk appetite vocabulary (risk appetite, risk tolerance and risk limits)
  • The regulatory framework behind risk appetite (ISO 31000, COSO guidance, OCEG, IRM)
  • Why despite so much hype the concept has failed to stick outside of financial services?
• Understanding the nature of how business really makes decisions
  • The relationship between management and shareholders when making decisions
  • Decision quality, conflict of interest, fraud and cognitive biases
• The alternative approach to think about risk appetite
  • Risk appetite as a shareholder tool
  • Risk appetite as a management tool
  • Risk appetite as a regulator tool
• Identifying existing appetite for risks
  • Reviewing existing policies and procedures
  • Identifying types of business decisions made by the management and authority levels
• Validating existing appetite for risks
  • Validating existing risk appetites against regulatory requirements
  • Validating existing risk appetites against risk profile
  • Validating existing risk appetites against stakeholder expectations
• Quantifying and document appetite for risk
  • “Zero tolerance” risks
  • Setting qualitative risk limits
  • Setting quantitative risk limits
• Reviewing and updating risk appetite
  • Integrating into existing policies and procedures
  • Auditing risk management effectiveness, building the relationship with internal and external audit and the regulators
• Make risk appetite stick and improving the overall culture of the organization

All our courses combine the latest scientific research in behavioral economics, decision making and quantitative risk analysis, while at the same time include practical case studies and examples from years of real live experience implementing risk management in large corporations across the globe.