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However, this approach fails to consider that risks are deeply rooted in uncertainty. Organizations must shift their mindset from risk avoidance to risk optimization. These can be broadly categorized into irreducible and reducible risks: Irreducible Risks: Some uncertainties Reducible Risks: Other uncertainties can be handled through risk measures and controls. Staying agile and ready to pivot is key to managing these emerging risks.

This week we explore a question that was posed in reference to IIA’s 3 line model “should risk management line) or risk management (2nd line). Risk as most now define it, are the effects of uncertainty on objectives. specified risk tolerances. the risk of reinforcing the wrong behaviours.

Identifying risks and reacting to problems when they occur uses our "Lizard Brain" which is fast and However, slowing down is not easy and that is one of the reasons why risk-based thinking is hard to do steps help to make sure that we use our whole brain when contending with uncertainties: Separate risk identification (fast brain) from risk analysis and assessment (slow brain) Beware of cognitive biases such as: optimism, confirmation, anchoring, ostrich effect, zero-risk etc.

Systemic risk is seldom considered. Aggregating risk scores and using heat maps to provide a holistic view of risk has some value. the risks of driving to work by understanding the risks associated with the steering wheel, gaskets, Enterprise Risk Management As a means to contend with the limits of a bottom up approach to risk many Operational Risk Management To properly address systemic risk an "integrative" or systems approach is

risk and compliance programs although it did impact priorities. Data was also reported as not being effectively utilized to reduce risk and by enlarge risk and compliance Why didn’t risk and compliance change during the pandemic? are sufficient to cover any changes to risk. Essentially, we are not prepared to expand risk & compliance.

Are you someone who believes that taking risks always leads to negative outcomes? Do you think that there's no such thing as positive risk? In the world of risk management, experts often argue that risk is always bad, negative, and leads to That is what effective risk management looks like: Risk adjusted plans improve the probability of success So, are you ready to take a chance instead of just taking a risk?

Compliance is fundamentally about reducing stakeholder risk: risk to quality, risk to safety, risk to the environment, and ultimately risk to trust. To ameliorate these risks they follow a management of change (MOC) process to buy down risk. to ensure that the organization is not taking on too much risk. The level of risk provides a leading indication of the progress made in buying down risk as well as an

Evaluating risk is important but handling risk is better. risk. of the risk. Risk measures may be available, feasible, but not effective enough to buy down risk below the risk tolerance risk.

of the risks themselves. Intrinsic Risk These risks are inherent in the process and activities. Emerging Risk These are risks that are developing or changing as a system evolves. Emerging risks can be classified as: Newly created risks Newly identified or noticed risks Changes Periodic risk assessments are useful to update risk profiles to take into consideration emerging risks

The guidance is to treat this risk as if it was certain to happen. Risk can rarely be reduced to zero, but incomplete risk assessments may greatly reduce the range of options open to risk managers. A total ban may not be a proportional response to a potential risk in all cases. However, in certain cases, it is the sole possible response to a given risk.

Risk scores are commonly used to support risk-based decisions and are usually derived from a semi-quantitative Risk scores were not calibrated Risk scores were not calibrated and aligned with the risk attitude ( For example, choosing a high risk option even if it was free would not be acceptable if the risk tolerance Using risk scores in an automated process may be vulnerable to the " Automation Bias " As risk-based are no different from risk scores.

The risk and compliance problem: Companies are too reactive. High consequence risk rarely occur due to a failure of a single activity but instead occur because of an alignment of vulnerabilities across multiple activities (i.e. systemic risk). To keep up at the speed that risk becomes a reality companies cannot wait for audit findings to make When companies adopt a proactive approach to risk & compliance they will have a competitive advantage