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How to Manage Risk Management

It has to be part of a CFO's everyday thinking.

Norman Marks, CFO.com | US
June 15, 2011

comment

The article is great! It is one of the few articles that I met where risk management is very simply described - when you drive a car, you need to watch around all the time (watch risks) but not just every 15 minutes or so because otherwise you can crash.

Posted by Polina Shinkina | July 14, 2011 06:42 am

Ownership beyond the CFO

While I agree with the points of the article, I don't think the point can be stressed enough that the ownership of risk management lies beyond the CFO's office as well. All the executive management need to be actively engaged not only in identifying risk, but also in actively pursuing strategies to mitigate exposure. It's been my experience that this is where the majority of companies run into trouble. As I engage new clients, one of the biggest hurdles we invariably have to overcome is the "analysis paralysis" that's so common in corporate America. It's frustrating to watch otherwise rational managers drive off a cliff, all the while endlessly debating which direction and with how much force the wheel should be yanked. While consensus is always ideal, action often requires that the decision be driven downward. This is especially true where compliance matters are involved, and the affected organizational unit is particularly prone to inaction. We recently performed a study involving over 1,500 mid-sized organizations where we discussed recent changes to Immigration and Customs Enforcement (ICE) policies, and the increased risk that those policies directly pose to the organization. While in the past undocumented workers have been the primary target of ICE enforcement activity, they are now targeting employers themselves. Even if the employer is found to be completely in compliance, the audits themselves represent an enormous drain on the resources of the unprepared. The first phase of the study was directed at top-line Human Resource executives, and while the overwhelming majority identified the risk posed by ICE audits to be "high to very high", the same individuals identified their likelihood of taking action in the next twelve months to be "low to very low". When CFO/VP of Finance were asked the same question in the second phase, they identified the risk as "moderate to high" and the likelihood of taking action to be "high to very high". The problem with the glaringly-obvious disconnect, however, is that the action taken by the CFO/VP of Finance was likely to be passing the matter along to the same Human Resources manager that already identified they would simply sit on it. Again: while consensus is always ideal, action often requires that the decision be driven downward. Paul Terrill, iProcess Online

Posted by Paul Terrill | June 27, 2011 10:15 am

Risk Management from a Profit Amplification perspective

The points made in your piece are very accurate. In our extensive work with retailers we?ve seen that having a clear understanding of inherent risks to the value chain is a critical component in achieving any type of profit amplification. What the understanding allows is for a retailer to find both the ways to prevent risk and to amplify opportunities identified ? by accepting and learning from the uncertainty of the marketplace. ? Sammy Kolt, VP of Application for Profitect.

Posted by Sammy Kolt | June 21, 2011 01:04 pm

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