institute of risk management & chartered accountants ireland creating value 11 th feb 2016...
DESCRIPTION
Where has Risk Thinking Come From? Evolution of Risk Management: Source Institute of Management Accountants Risk Management International RMI Board Risks 3TRANSCRIPT
Risk Management International RMI Board Risks
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Institute of Risk Management & Chartered Accountants Ireland
Creating Value
11th Feb 2016
‘’Doing Risk Management Vs The Quality of Decision Making’’
Risk Management International RMI Board Risks
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Topics:
• Where has Risk Thinking Come From? Where is Risk today? Where is Risk going tomorrow?
• Lessons learned from the Global Financial Crisis,
• The Relationship Between Risk and Strategy,
• Moments of Truth: Tell Me? Show Me? Prove it to Me?
• Operationalizing the links between Risk and Strategy,
• Conclusions,
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Where has Risk Thinking Come From?
Evolution of Risk Management: Source Institute of Management Accountants
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Where is Risk Thinking Today?
Next Evolution in Risk Management:Resilience: Focus on Un-measurable Uncertainties
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Where is Risk Going Tomorrow?
R.I.S.K.: Risk Intelligent Systems Knowledgeware within the Industrial Internet of Things (Reference: James Bone etc.)
Note: Key Driver … Industrial Internet of Things
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Lessons Learned: Global Financial Crisis
Directors Responsibilities:• FRC: Sep ‘14 Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting • FRC: June ‘14 Guidance on the Strategic Report• PRA: July ‘15 Supervisory Statement: Strengthening individual accountability in
banking
Risk Appetite & Culture:• FSB: Nov ‘13 Principles for an Effective Risk Appetite Framework• FSB: Apr ‘14: Guidance on Supervisory Interaction with Financial Institutions
on Risk Culture
Integrated Thinking, Reporting & Decision Making, • International Reporting Council Framework ˂IR˃: Dec ‘13• IFAC: May ‘15 From Bolt-on to Built-in…Decision Making…tearing down the
Risk Management Silos• IFAC Nov ‘15: Creating Value with Integrated Thinking
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Lessons Learned: Global Financial Crisis
The Role of the Board: UK Corporate Governance CodeSource (Content): UK Corporate Governance Code Guidance on Risk Management , Internal Controls and Related Financial and Business Reporting (Sep 2014) NOTE: TRUNCATED
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Lessons Learned: Global Financial Crisis
Integrated Thinking & Reporting NB: The Value Creation Process: Source: International Integrated Reporting Framework ˂IR˃
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The Relationship between Risk and Strategy
Moments of Truth: Tell Me? Show Me? Prove it to Me?
Linking Risk, Strategy and Decision Making Processes at a Level of CalculationAbility to Demonstrate
1. Bronze: Unable to demonstrateStructured informality, but unmeasured
2. Silver:Limited ability to demonstrate Board awareness, existence of formal processes, measurement has commenced,
3. Gold:Ability to demonstrateSystems are consistent and measurement is becoming more reliable
4. Platinum:Fully able to demonstrateDemonstrably credible alignment of leadership, strategy, people, partnerships & resources and process/product/services
L
5. Prove & TestIndependent Assessments,User Percentile of Total Process Owner Population Recognised as Global role model Organisational systems optimised and positively influencing performance and access to & cost of capital,
Increasing Agility, Robustness & Long Term Sustainability
Commercial in Confidence:
Copyright RMI Board Risks
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Operationalising the Link between Risk and Strategy:
Moments of Truth: RMI Tell Me? Show Me? Prove it to Me?
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Conclusion: Be Aware of, and Understand, World Class Practices, ‘Measure’ your alignment, Accentuate your Strengths and Address your Areas for Improvement
• ‘’It ain’t what you don’t know that gets you into trouble; it’s what you know for sure that just ain’t so!”
Mark Twain
• ‘’Risk comes from not knowing what you are doing’’Warren Buffet
• ‘’If you can't describe what you are doing as a process, you don't know what you're doing’’
W.Edwards Deming
• ‘’In the absence of certainty, the only way to maintain potentiality is to focus on excellent execution and demonstrable resilience at the same time whilst taking as much acceptable risk as is reasonably possible’’
(Peter Bernstein, Against the Gods: The Remarkable Story of Risk)
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• Thank you!
Peadar DuffyFounder & ChairmanRisk Management International