Risk-sensing flaws present an immediate opportunity for the CEO to personally ratchet up the relevance and performance of the organization’s risk-sensing program. They also present an opportunity to gain alignment regarding which strategic risks the program should detect.
Risk sensing should identify risks to competitive advantage, market position, and financial performance in the businesses and support senior-level decision making. So, rather than isolating risk sensing in an ivory tower of technicians, CEOs should relate it to strategic business issues and integrate it into the risk management and risk governance programs.
The current risk environment makes this the perfect time to correct any flaw in your organization’s risk-sensing program, which might include:
As a relatively new capability, risk sensing can be defined, configured, and implemented in various ways to develop a robust, relevant, and effective program.
Here are 4 steps toward establishing such a program, which Deloitte has implemented internally.
Though it’s easy to see risk-sensing narrowly or as a set-it-and-forget it mechanism, CEOs are responsible for ensuring that strategic risks are detected, tracked and addressed. Risk sensing is integral to these efforts. Again, the current risk environment makes this the time to adjust or upgrade your risk sensing program.
To download a copy of the report, “Risk Sensing: The (evolving) state of the art” please click here.
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