5 victoria stubbs risk

Putting Risk at the Head of Strategic Planning

Victoria StubbsChief Risk Officer

Is risk an input into the strategic planning process or a result of

the strategy implemented?

What is Risk?

What is Risk?

“A situation involving exposure to danger”

What is Risk Management?

“The identification, analysis, assessment, control and avoidance, minimisation or elimination of unacceptable risk.”

Where are the opportunities?

The Importance of Risk Appetite

• Where is the organisation willing to take risks?

• What level of risk are you willing to take?

• Does the Board agree with the management?

• Are there areas where you are not living up to the risk appetite?

• Which risks should be mitigated?

Addressing the “known unknowns”

• Using risk methodologies of impact and influence, prioritise risks

• Horizon scanning at senior management level

• Understanding of the business model, income and profit drivers is essential

• Scenario analysis vs. stress testing

Rewarded vs. Unrewarded risks

• Differentiation is important

• Unrewarded risks – e.g. tax compliance, pension compliance – automation can reduce costs and risks

• Rewarded risks – e.g. credit risk • Key for strategy - understand level of risk appetite • Business model - bespoke vs. automated mass market• Market leader or market follower

Using Risk as a Competitive Advantage

Risk can lead to opportunities • Which risks can you manage better than your competitors?

• Efficiency• Analytics• Niche Markets

• Which risks have you spotted before your competitors?• Product and market development• Pricing for risk

Risk Based Pricing

• Are all relevant risks considered in the price?

• Can your risk management bring you a pricing advantage?

• What are the costs of your operational risk losses?

• Which risks should you be insuring against?

Is risk an input into the strategic planning process or a result of

the strategy implemented?

Questions for your business

• Is the risk team part of the strategic planning process?

• Which risks could have the biggest impact on your strategy?

• Do you know all your biggest risks?

• Do you know what your risk appetite is in relation to these risks?

• What needs to change in your strategy as a result of your risk appetite?

QUESTIONS