Enterprising risk management

This site sets out basic ideas and techniques within risk management, generally aimed at the level of a non-executive director (NED), rather than risk specialists. We explain and demonstrate the value that uncertainty management can bring to the "real business" in hard and soft terms.

Strapline 1: Value based risk management

Value-based from outset: what does it mean? Despite the obligation from regulators to perform risk managament, the real drive should come from the value it adds. From the outset we investigate the value claims. Are they credible? To what extent can the value be captured for our organisation?

1. A value emphasis: Despite the skeptical view below, we believe that risk management can indeed deliver value. It is a core skill in steering through an uncertain future. Our risk emphasis is summarised as:
   • 50% strategic uncertainty: to help manage the goodwill value of the firm
   • 30% loss prevention: the traditional risk management of stopping bad things happening
   • 20% capital: particularly in financial services (where there is a tendency to gravitate to capital)
   This is perhaps a reversal of the traditional risk management emphasis in insurance. Read more...
2. A constructively critical approach to value claims: Often the potential of risk management is not clearly articulated. Where value claims are made they often lack substance and/or rigour. Senior Executives may therefore be unclear on the real value proposition. Despite this, the time and space given to risk management has increased dramatically. We adopt a direct and straightforward to the value potentially available and how it can be delivered – no more emperor's new clothes. Read more...

Get buy-in to the value required from those that matter before launching a risk management initiative.

Strapline 2: Integrated by design

Theory and regulators tell us to "embed" risk management into the business. But that's an artificial approach. Far better to integrate the risk management by continually linking to uncertainty over objectives.

Start with strategic uncertainty and the business model. Work through major projects through to operations. Rather than use a single boilerplate risk process (indentify, assess, treat, report etc) use the right tools for the job. Risk is uncertainty regarding senior management's objectives. Integration can be automatic. Read more...

Don't reverse a risk management system into "the business" – make it a real Board responsibility.

Audience 1: non-executive directors

The reports Roads to Ruin (published in 2011) and The reality of risk (published in 2012) together cast doubt on the effectiveness of the control exercised by Boards and in particular NEDs. Questions of governance, competence and even integrity were raised. How should NEDs respond?

... the board appeared not to be in full control of the business, including cases where the Board or its NEDs did not fully understand the business model, the foundations and assumptions on which the business model was based, or the company’s reputation and the essential foundations of that reputation. Source: Roads to Ruin: "Boards can be blind to risk" – the Sunday Times article

This site covers some core risk management techniques which enable direction and challenge to come from the top rather than from risk managers. But I hope it will prove useful to others too. More on those two reports...

Audience 2: risk management "seekers"

Those who are seeking better ways of managing risk and are willing to put in effort and go against the crowd to find them. UPDATE THIS

Site content

The site is currently divided into three areas:

1. Techniques: Examining core aspects of "best practice" risk management frameworks.
2. Gurus: These are the people whose writings I most value, as they blend theory and practice.
3. Applications: Looks at how risk management can be used in practice.

At one level the material on this site is basic, revisiting the basics rather than attempting to be "leading edge". However the intention is to be enterprising – to look at risk with fresh eyes. Please note that this site is being written for my professional development purposes, though I would be delighted if others find it of use.

About Andrew Howe

I've been working in risk management since September 2009, but my background is in business and proposition development. You can find out more about me at:

• my LinkedIn profile or
• my critique of the actuarial profession's website