Efforts to demonstrate the benefits of risk encouraged

There is a positive side of risk, one that holds the promise of creating value for organizations and contributing to risk management becoming more entrenched in organizational culture and decision-making.

That was among the views that Deborah Luthi, president of U.S.-based RIMS and enterprise risk manager for the San Francisco Public Utilities Commission, shared with attendees of Horizons: 2012 RIMS Canada Conference in Saskatoon, Saskatchewan on September 10.

“The mention of risk often sparks a flurry of negative thoughts in boardrooms around the world. But in actuality, no successful company can grow without taking risk – well-managed risks,” she said.

Historically, Luthi pointed out, a great deal of time has been spent on developing plans to protect organizations. “These risks and many uninsurable business risks present opportunities for risk practitioners to help facilitate strategies that can create value for our organizations.”

But work remains to bridge gaps in expectations. Luthi cited findings from the 2012 Excellence in Risk Management Survey, research that involved more than 1,300 risk practitioners and senior level executives.

Released earlier this year, Luthi said the survey shows that 87% of companies with annual revenues of $1 million reported that their expectations of the risk management department have increased. As well, 71% of the C-suite (very senior officials) who were interviewed reported that the role of risk manager has already increased.

If risk professionals and the C-suite agree on the significance of risk management, why then does a disconnect sometimes still exist? A key element “may be our failure to communicate the positive side of risk,” Luthi suggested.

“Once we’ve mastered the art of effectively communicating the positive side of risk, and the value it can create for your organization, I think the C-suite doors will open, risk management will become integrated into the organization’s strategy and decision-making, and you will have contributed to a significant shift in organizations’ risk culture.”