Treat Risk As A Trapped Cockroach!

 Alan Shapiro photographyImage: https://www.flickr.com/photos/alanshapiro/8453617848/

(c) Alan Shapiro photography

 

Treat Risk As A Trapped Cockroach!

Risk management engulfs a lot of different risks and liabilities to consider and assess. It goes from the micro-economic situation of the company, its positioning, activities and processes, through the market in which she operates and her competitors, all the way towards the macro-economics and global geo-political situation.

To manage and report this complex and interrelated web, following compliance rules is good start because compliance reporting will be technically sound and, by definition, in compliance with the appropriate rules (think IFRS, Basel I II III, etc).

But does compliance reporting suffice?

Let’s take an analogy from the Doctor House series. In the E.R. waiting room, a man suddenly starts screaming in agony and running around in circles. Doctor House’s team suggest many different tests to cover all possible causes, to which Doctor House happily agrees in that episode, just for the sake to avoid having to perform hospital hours. But right before his team runs out, he tells them to also remove the cockroach trapped in the ear of that patient.

Being a risk manager, you do not have to be as witty as the fictitious character of Doctor House. However, building up towards your upcoming reporting cycle, use compliance reporting as a solid support to additionally consider to:

  • Question the obvious
  • Take extra time trying to further understand your own complex web
  • Avoid jumping to conclusions and pre-formatted reports, thinking all answers have thus been given
  • Simulate! Add more What-If scenario’s
  • Decide if solely the existing compliance reporting does indeed cover it all

As very often for many positions within a company, it boils down to aim to fully understand your own business, your company and its position on the market. Not in a “one-shot picture” way, but in an “ongoing movie-way”, over time, with simulations and possible scenarios.

Compliance is surely required and greatly helps, but haven’t you overlooked any small insect still trapped somewhere…?

 

Martin van Wunnik – http://be.linkedin.com/in/mvanwunnik– Independent Project Manager

March 1st, 2015

 

 

About MvanWunnik
Independent Project Manager for Financial projects (Consolidation, Control & Reporting) at ARSIMA Projects, Financial Strategist for starters/SME's at FinanceCoach24.com

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