Risk management is one of those organisational functions that simply cannot remain static. In times of change – whether from within an organisation, from the external environment, or both – this is amplified. It goes without saying that the COVID-19 pandemic has altered the operational landscape for every Australian organisation.
It is now they need to transition away from reacting and just managing, and start building their resilience. Taking a proactive approach to assessing an organisation’s current risk landscape, including its risk appetite and controls, can help ensure an organisation is best positioned to achieve a sustainable competitive advantage into the future.
The impact of COVID-19 will be long-lasting and the risk landscape is complex and continually evolving. Standard business processes that were fit-for-purpose in the past may simply not be suitable any more. The question is, do you know if this is the case for your organisation?
The answer can only be determined by taking a closer look at your organisation’s identified risks and its appetite for each. The potential likelihood and impact of risks identified prior to COVID-19 may now be increasing in severity. In addition, established internal controls may no longer be fully effective because of rapidly changing operating processes and/or an inadequate alignment with external environment conditions.
Things that ran smoothly in the past may now be sources of potential risk. Supply chain is a key example for many organisations, with many organisations now unwilling to take on the same level of supplier risk as they did pre-COVID-19.
What leaders must consider
Every organisation is unique and their risk exposure in today’s economic and social climate will undoubtedly differ. This is why it is imperative to reassess an organisation’s risk management processes now to ensure they can overcome the complex operating environment as it continues to evolve.
The key areas to consider when reassessing your organisation’s risk management process are:
- Strategy and planning – Are the assumptions underpinning strategies, plans and forecasts still valid?
- Supply chain – Are there any potential ‘weak links’ and can you identify and remedy them quickly?
- Reputation – Can you effectively manage you organisation’s reputation with all stakeholders?
- Workforce planning – Do your people have the support they need to keep delivering for your clients/customers?
- Technology – Can IT changes deployed during the COVID-19 response be sustained or are alterations needed?
- Legal and compliance – How have your organisation’s obligations changed and how are they being managed?
- Finance – Has the impact on the organisation’s short and long-term financial position been assessed and measures put in place to secure it?
- Health, safety and environment – What is being done to address these measures in the new operating climate?
Of course, each of these areas has a multitude of considerations. This is why our risk management experts have prepared a checklist of the key questions Boards and executives should ask as they undertake their risk management process.
Download the checklist today to learn more and position your organisation with the right perspective to risk for today’s complex world.
DOWNLOAD THE CHECKLIST
To find out more about how a risk management assessment could help your organisation, contact a member of BDO’s Advisory team.