Risk thinking emerging as a critical business strategy

Risk is critical to all entrepreneurial ventures. But there is a need to move from pure compliance-based approach (to risk) to Enterprise Risk Management (ERM), noted speakers at a webinar on the Importance of ERM in Organisations and Careers.

Conducted by India Affiliate of Institute of Risk Management – UK (IRM India), a global professional body, the panellists included Shashank Shah, Fellow’17, Harvard University, KBS Manian, Group Chief Risk Officer, Apollo Hospital, Venkatesh S, Head, Risk and Internal Control, Siemens Limited, Carolyn Williams, Director, Corporate Relations, IRM London with Sachin Paranjape, Leader Strategic Risk Practice, India & Corporate Governance Service, Asia Pacific, Deloitte moderating the discussion.

Emphasising the importance of risk intelligence, the moderator Paranjape kick-started the discussion by pointing that it (risk intelligence) would be the key to a risk manager’s role because there are risks associated even with not taking risks. “The CRO (Chief Risk Officer) therefore plays a critical role in helping the CEO develop healthy risk-taking behaviour, and in providing guidance not just on avoiding certain risks, but also on making Risk Informed decisions”.

Conceding that risk is critical to all entrepreneurial ventures, Shah, Fellow ’17, Harvard University said “if you consider the top 100 economies of the world, 70 of them are companies while only 30 are countries - this demonstrates the need to focus on ERM in today’s VUCA (Volatile, Uncertain, Complex, Ambiguous) world.

“The key skill for a successful enterprise risk manager would be the ability to see the big picture, connect the dots and reduce the negative impact not only on the profitability of the company but on a larger set of stakeholders including people, society and the environment,” he said.

“Risk managers need to be enablers rather than masters of everything,” said KBS Manian of Apollo Hospitals, before pointing out how CROs would be able to facilitate their leadership team structure their risk management.

More than auditors, they need to be advisors, and must develop collegial relationships across all departments and functions, for greater trust and collaboration in achieving the organization’s objectives, he added.

While stressing the need for organisations to keep reinventing themselves, Carolyn Williams observed that the personnel too, would need to have the ability to understand risk and interpret emerging trends from a risk perspective. The role of a CRO, therefore, is to ensure risk proficiency and management across the organization for better decision making.

The panel also discussed the impact of the changing business environment on start-ups, emphasising the need for entrepreneurs to create better value proposition for their investors.

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