The Risk Intelligent CFO: Converting Risk into Opportunity (Deloitte)

The Board and C-suite are asking hard questions about risk. And they are seeking better processes to manage uncertainty in a challenging economic and regulatory environment.

Where do they turn? Increasingly, to the CFO — a voice of risk-related thinking; a catalyst, strategist, operator, and steward with respect to risk decision making; and, in some organizations, the de facto chief risk officer. Dealing with today’s risks takes more than risk management. It takes Risk Intelligence. Given the comprehensive view available to CFOs — across balance sheets, corporate transactions, and the business — they are strategically positioned to recognize, manage, and report risks and opportunities to key stakeholders.

Building on this unique strategic perspective, the CFO can help educate the CEO, the management team, and the Board on the risks they face. By developing a more strategic vision and approach, the CFO can also assist the organization in taking the right risks — and taking the right amount of them.

Of course, creating a Risk Intelligent culture is neither easy nor foolproof, and no company is capable of mitigating or capitalizing on every risk that materializes. Instead, becoming a Risk Intelligent Enterprise™ requires a more practical approach: one that factors the consideration of risk into every strategy, decision, and activity, enabling the company to take advantage of the opportunities risks can
create.

In the following pages, we offer some recommendations
to help you do just that.

Deloitte's Recommendations:

Recommendation: Create comprehensive
scenario plans.

Recommendation: Recognize that your strategy
is not iron-clad.

Recommendation: Put signals in place and
define thresholds.

Recommendation: Assume the role of risk educator.

Recommendation: Determine acceptable and
unacceptable risks.

Recommendation: Control your reputational risks.

Recommendation: Map your risk factors.

Recommendation: Create a compliance stress test.

The full memo is in the Data Library under Foreign/US/Deloitte folder, or in Global/Risk folder.

The Board Director Training Institute (BDTI) is a "public interest" nonprofit in Japan dedicated to training about directorship, corporate governance, and related management techniques. It is certified by the Japanese government to conduct these activities as a regulated nonprofit. Read a summary about BDTI here, and see a menu of its services for both corporations and investors here.

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