Innovation of Risk

18/06/2018

Is the business of risk management Risk’s business? The risk management function has been likened to a lighthouse - always on the watch to make sure nothing goes wrong and lighting the way for everyone so they can navigate the safest path. However, this presupposes that the captain of the ship has taken accountability for ensuring that the ship is seaworthy, all personnel on board are competent and trained, any passengers have been provided with safety information and sufficient due diligence has been undertaken to understand the impact of the weather, allow for the vagaries of the sea and ensure that the communications equipment on board the ship will function when needed so that the captain can communicate with the lighthouse operator.

And we would all expect that a reasonable and semi-competent captain would have taken steps to make sure this is the case. So, in a corporate environment, does the same principle hold true? As a risk management function, are we satisfied that ou

The risk management function has been likened to a lighthouse - always on the watch to make sure nothing goes wrong and lighting the way for everyone so they can navigate the safest path. Click the title to read more.

13/06/2018

Business Continuity is Needed Everywhere Our daily life events provide us with the best examples of risk management. Seriously. Think about events during your day, and then step back for a moment and consider the risks surrounding those events. I bet if you do this with the right mindset, you will now recognise a number of risks that impacted events during the day - whether they be financial risks, operational risks and/or compliance risks.

The simple act of driving a car generates many individual risks. Financially you are making a commitment regarding the fuel you are using and the funds available to you to purchase new fuel if needed. Operational risks abound this event, ranging from the operational risks of the vehicle itself and of your learned processes in driving the vehicle. And finally, driving a car involves understanding and comprehending the many varied driving laws and their changeability.

Imagine thinking about risks this way and then trying to live your lif

08/06/2018

Boy, can we complicate things! Hello everyone,

Man has landed on the moon!

But, not recently it was over 40 years ago man achieved this complicated feat!

So, why do I talk about this event?

Quite simply because when it comes to risk management we somehow seem to have complicated something that has been in existence since the dawn of man, yes since the dawn of man. The day we stood up and first assessed our surroundings we were considering the risks. The risks of being killed by that beast in the wilderness where our only form of mitigation was "fight or flight".

Did we make risk management that complicated back then? Imagine that same caveman not leaving the cave until he had completed his mandatory compliance training and read 30 pages on risk management processes! Ok, now I am over simplifying a little but bear with me, I do have a point.

So, today when we start responding to feedback on our practices we always seem to start by generating a complex process document, a sw

Quite simply because when it comes to risk management we somehow seem to have complicated something that has been in existence since the dawn of man, yes since the dawn of man. The day we stood up and first assessed our surroundings we were considering the risks. The risks of being killed by that be...

03/06/2018

Risk Impact Spectrum Risk impacts must include consideration of the risk impact spectrum.

The current floods occurring in North Eastern Australia are a natural disaster, which is hard to predict and even harder to control. However these events make us realise that the initial consideration of the impact at hand, may actually not be the only impact your are dealing with at the time or in the future.

Every risk you have or think you have has a broad range of potential impacts for your organisation. In this case the initial reaction regarding this risk, and event, is the initial impact of the surrounding floods and the damage to property and potential for loss of life. But the event has layers of potential impacts. For example, the floods could result in parts of Brisbane being without drinking water. During a natural flood disaster, we now considering drought based controls due to the potential impacts to drinking water in Brisbane!

This broad view of risks has reared its h

Risk impacts must include consideration of the risk impact spectrum.

29/05/2018

Risk appetite box, where do we stand? The key question considered across the globe every day is "what is our risk appetite box, where do we stand?".

A few months ago a member of Australia's regulatory body for Financial services (APRA), Ian Laughlin, presented on risk appetite. He opened his speech with the following statements.

"Ask yourself these questions:

Would you ever take up hang gliding?
Would you drive a car if the seat belt was broken?
Would you post a potentially compromising picture of yourself on Facebook?
If you were down to your last $1,000, would you bet $10 on a horse after a hot tip?
$100? $1,000?
At age 65, would you invest 25 per cent of your super fund in the share market? 50
per cent? 100 per cent? Or none at all?
Would you jaywalk at a busy intersection to save a minute?
Would you have a one night fling? (e.g. at a reinsurance rendezvous!)

Now the answers to these sorts of questions start to give a picture of your personal risk app

The key question considered across the globe every day is "what is our risk appetite, where do we stand?".

24/05/2018

Four lines of risk management defence... The Bank for International Settlements, sometimes known as Basel Committee, have just released an Occasional Paper (source: https://www.bis.org/fsi/fsipapers11.htm) on "The 4 lines of defence model for financial institutions".
If you don't know BIS or Basel, then picture them as the Jedi Council of central banks globally. The Reserve Bank of Australia (RBA) sit on this council; and APRA as the prudential regulator leverage the content that comes from BIS for its prudential regulation.

So, what does this Occassional paper outline?

Essentially the focus is on the 4th line of defence, being Regulatory Supervisors and External Auditors, and how they interact with the 3 lines of defence (being the front-line operating functions, risk management and internal audit).

A key comment in the paper is "a need for establishing standards on how to foster the relationship by balancing the obligation of the supervisor to assess the internal function

The Bank for International Settlements, sometimes known as Basel Committee, have just released an Occasional Paper (source: https://www.bis.org/fsi/fsipapers11.htm) on “The 4 lines of defence model for financial institutions”. If you don’t know BIS or Basel, then picture them as the Jedi Counc...