With organisations facing constant risk from all directions, including the continuing impact of Covid, ESG risks associated with climate change and supply chains, geopolitical issues created by the ongoing war in Ukraine and other global tensions, as well as the ever-present possibility of another financial crisis and fluctuating inflation, not to mention cyber security threats, how can companies protect themselves from unforeseen hazards and ensure they have the best chance of a stable and profitable future?
Gone are the days when board members and senior management could rest on their laurels and deal with an emergency when it arose. Most businesses are now aware that they must be proactive in risk management to avoid a catastrophic outcome from any unexpected and damaging event. This can be achieved through good risk governance and controls.
Risk Governance and Controls explained
Governance is the system of rules, practices and standards that shape a business. Risk governance applies these principles to identify, assess, communicate and manage potential risks to the company.
Effective risk governance and controls should provide a decision-making framework to help recognise and respond to risks to reduce or eliminate their negative impact on an organisation. Policies and procedures can then be created to define risk tolerances and assign responsibilities to company members who will take ownership and accountability for acting on specific risk factors.
Good risk governance and controls can improve efficiency and save money through the streamlining of monitoring and reporting processes and reducing the financial and human cost of unforeseen circumstances.
The explosion of the Risk Management job market
Since the pandemic and on the back of many other modern risk factors and lessons learnt from the financial crisis of 2007, risk management careers have become one of the most critical jobs in the world. Many companies are now clambering to create risk governance teams and recruit the best talent for roles such as Risk Management Analysts, Risk Modellers and Compliance Specialists to help them ensure their business is protected from future disasters. This, in turn, is creating a very healthy job market for governance and compliance professionals with a vast array of opportunities available to suitable candidates.
Risk governance roles can involve anything from developing a framework and analysing dangers to a business to designing reports for key stakeholders or communicating potential risks to the broader organisation.
It’s clear to see why companies are now prioritising building effective risk governance teams when you look at the results of a recent global survey by Private Content Network providers, Kiteworks. Findings in their ‘2022 Sensitive Content Communications Privacy and Compliance Report show that more than 50% of organisations believe they are inadequately protected against third-party security and compliance risks citing various reasons, including 58% lacking content governance controls to measure third-party risk and nearly 8 out of 10 believing their compliance reports are not entirely accurate.
When should a business review its Risk?
In today’s world, it is crucial to be proactive rather than reactive when managing risk, but once you have the right risk governance team and control framework in place, how should a business decide when and how often to carry out reviews or updates?
According to consultancy giants PWC, there are several key moments when a company should act on risk management:
- Structural or internal processes have changed within your business
- Increased risk/complexity has emerged within your sector
- You have witnessed failure in your existing framework
- New/updated regulation or legislation that affects your business
- Your company is pursuing a new direction
- Your organisation has poor visibility into its internal controls/processes/employee behaviour.
And they go on to say that if you’re getting it right, then you should be able to recognise these behaviours within your organisation:
- Governance arrangements are benchmarked to leading practice
- Top-down understanding of the governance framework
- Governance, risk and controls that are aligned to corporate risk appetite.
It’s encouraging to know that organisations worldwide are now placing so much importance on risk governance and controls, hopefully leading to a more stable future for the global economy. Those companies still catching up can be reassured that the growing market means risk governance professionals are out there, looking to join their teams and help them manage their risks to protect their business.
If you’re looking for your next career move in risk governance, compliance or any of our other specialist areas, or looking for risk governance professionals to join your company, talk to McGreggor Boyall today to find out how we can help.