Three Risk Factors
To Present to Your Board By Michael D. Cohn, CPA, CISA, CGEIT, WolfPAC Solutions Group
T
he COVID-19 pandemic drastically altered how we work, how we shop, and how we interact with people in all facets of our daily lives. We won’t return to the world as we remember it in December 2019, and new models for banking, healthcare and education remain a work in progress. In its wake, this global pandemic brought a wave of unprecedented fiscal and operational risks to many financial organizations. Recognizing the radical change in threats seen during the pandemic, risk managers and the Chief Risk Officer (CRO) should now analyze, alter and enhance their risk presentation and evaluation strategies to continue to effectively communicate to the executive team
• 22 •
• September-October 2021
and Board. To evolve with these trying times, there are three foundational elements that risk managers should be reporting right now—risk appetite statements, enterprise risk assessments (ERA), and key risk indicators (KRI).
Risk Appetite Statement
In a strategic, top-down enterprise risk management (ERM) program, a risk appetite statement is a translator. It lets organizations take the enterprise-level strategy and turn it into a business unit playbook—clearly defining the risks they’re willing and unwilling to take. The organization can use this catalogue of potential threats to develop metrics that inform current performance verses expectations.
