For Website-18Risk management is finally coming of age as boards focus increasingly on strategic risk. In part driven by the FRC’s guidance for directors, and in part driven by sheer common sense, directors are looking more at their strategic risks and less at some of the operational risks. This is not to say that OpRisk is not important: it is. But long term sustainability is more likely to be driven by managing the strategic risks that are the basis of creating and protecting long term value. In this short video, Richard Anderson looks at the importance of strategic risk:

This is just one of the many subjects that will be on the agenda for Risk Reimagined (click here for more information).

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One Response to Strategic risk is rising to the top of the agenda

  1. daniel kalwiji says:

    I have not seen your video but I agree that strategic risk can define how sustainable the organization is especially in the long term.
    Changes in industry regulation, competition, disruptive technology, reputation, interest rates often lead to lower than expected performance of dominant firms in oligopoly or monopolistic competition Markets.

    Existence of surplus profits obtained from this market advantage, enable managers to produce satisfactory performance amidst a so called tough economic climate “Strategic risks”

    Both managers, the board and other stake holders are likely to be less sensitive to external changes.

    Organization culture and risk culture combined to use terms from your earlier expositions and applied to what I have observed in practice, can help explain why managers did not take adequate responses to changes occurring and emanating from the external environment but directly impacting on risks and opportunities of the company.

    To counter strategic risk, companies must increase the sensitivity to loses caused by strategic factors as currently the responses to strategic risk is absorption of losses being external factors that are unavoidable.
    Boards must ask why companies did not anticipate the extent of losses emanating from strategic risks.

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