Just as captains and crews have navigated ships through ever changing seas for thousands of years, Chief Risk Officers (CROs) are the new navigators in the 21st century. Both rely upon the principles of transparency to see their way to successful navigation to achieve their missions and goals.
Since 1200 BC, lighthouses have served multiple purposes of both warning of danger associated with land masses and providing the comfort of land nearby. They are an example of both the value protection and value creation elements of a risk management system or asset. The lighthouse protects the ships from striking land and helps to create the value associated with sea transport of goods and people.
Chief Risk Officers use collaborative, open, and objective risk assessment techniques to identify (shed light) on important elements of key risks such as likelihood, impact, level of controls, velocity, etc. The entity can then choose to manage and measure the risks to both protect and create value.
Think of risk assessments as helping to lift the organizational fog that exists around key elements of achieving strategy or operational success. Many reasons exist for not addressing key risks including cultural, financial pressures, unaware, etc. The CRO provides the various functional areas and business leaders with a formal mechanism and positive governance structure to identify and address the potential issues that keep them up at night. For a large entity, it will likely take many years to address all key issues identified due to resource and budgeting constraints. However, the process empowers open communication and prioritization of key issues and opportunities thus increasing the likelihood of achieving key organizational strategies and objectives.
Just as lighthouses empower safe passage for ships, the CRO enables their entities and functional areas to see their way to organizational accomplishments and resilience. The CRO helps their organizations to better understand that key risk identification, measurement, and management enables both the protection of current value and the creation of additional value.