3 Ways to Consider Risk as it Relates to Strategy
- By Liz Briggson
- September 21st, 2022
Strategy inspires enthusiasm for future possibilities. On the other hand, the discipline of risk management carries connotations of caution and avoidance. Perhaps these juxtaposing views of strategy and risk are outdated. What if strategy and risk are really two sides of the same coin with capabilities when harnessed together to produce stronger, faster growing, and more resilient organizations?
Liz Briggson recently delivered a presentation sponsored by NetSuite on this very topic. You are welcome to view the recording: The Intersection of Corporate Strategy & Risk Management.
Highlighting this important relationship, COSO released the refreshed Enterprise Risk Management Framework in 2017 with the tagline, "Integrating with Strategy and Performance." Accompanying the revised framework, Miles Everson, PwC U.S. Advisory Leader delivered a call to action,
“It’s time to view risk as a competitive advantage, reframing risk as a key enabler of strategy and performance.”
There are 3 ways to consider risk as it relates to strategy:
- Consider the probability of strategy not aligning with your organization's mission, vision, and core values
- Consider the unintended implications from the strategy chosen
- Consider the risk to strategy & performance to business objectives
Most often, organizations jump ahead to the third consideration, analyzing risks to business strategies once they have been developed. In reality, there is far more at stake when a strategy fails to align with an organization's core values or when a strategy pulls the whole company off track with unanticipated consequences.
Consider a banking institution with the core value, "What's right for customers" that employs an aggressive strategy to open new customer accounts at all possible opportunities. In this case, the strategy is misaligned to the value, and the consequences are widespread: poor PR, loss of business, regulatory sanctions.
While the discipline of risk management does involve caution, it does so in a productive way that balances out overly eager strategies. Considering risk up front provides a chance to pause and consider the consequences of strategic decisions that cascade down into business objectives. It also provides an opportunity to consider different options before moving ahead. Looking at strategy through the lens of risk provides a deeper sense of confidence in your plans for the future.
We know CFOs have a lot on your plate with being part of strategy-setting, risk management discussions, and running the day-to-day financial operations of your organization. We invite you to join us for NetSuite's upcoming webinar, "Delegation for CFOs." Registration is available here and open until October 13.
Join us for a free one-hour CPE program, Delegation for CFOs, presented by Jamar Cobb-Dennard, at 1:00 PM ET on Thursday, October 13: https://encoursa.com/webinars/4ynnm5yp/delegation-for-cfos
- Risk management
- strategic planning
- core values
- business performance