Strategic Risk Management (SRM) originated in engineering, health and safety but is now widely used in commercial, industrial and many other business including online enterprises. As companies continue to expand into more cross border ventures in a world of rapid change, especially as there is an even greater use of technology which allows actions and changes to be executed faster than ever before, strategic risk management becomes crucial in response to statutory and regulatory external pressures.
No matter what business an organisation is engaged in, there will be business risks. A good example of this is Apple's entry into China http://www.cnbc.com/id/101340364 or Alibaba into America http://www.techtimes.com/articles/4518/20140318/alibaba-to-enter-u-s-stock-market-with-100-bn-valuation.htm
If your business can identify the need for change, design the changes required and implement these changes effectively and efficiently as compared to the competition then you are more likely to survive and prosper. A good and note worthy example of a business that understand risk are the drug cartels. Check out this article by Chris Mathews and tell me if you're not overly impressed (focus on how they can keep a step ahead of others) http://fortune.com/2014/09/14/biggest-organized-crime-groups-in-the-world/ .....focused and ruthless to ensure that their strategy is executed. There is an old adage " risk and reward go hand in hand."
So, what are the core areas that an organisation should devote its efforts and resources to when considering SRM? There are essentially 4 core elements and they are:-
- Strategic Planning
- Making the strategies work
- Project management of change, and
Strategic planning is identifying the best options available and selecting the most appropriate.
Connecting the macro strategic plan to the day-to-day activities is critical to making the strategies work and for its delivery.
Applying 'project management' concepts, tools and techniques allows the manager to plan and implement change effectively so as to increase the likelihood of achieving the required strategic objective. I would recommend that if you're not familiar with project management concepts and its application to business organisations that you check out the Project Management Institute and register for their courses http://www.pmi.org/
SRM identifies, monitors and manages the risk profile of the organisation......this couldn't be a much more concise statement! A major failure or deviation observed in any of those areas can result in the need to revise or change any or all of the previous items which could entail the formulation of a new strategic plan.
It is also worth noting that implementing change to achieve a desired strategy generally covers 4 primary risk areas which are:-
- strategic risk
- change or project risk
- operational risk
- unforeseeable risk
I will discuss these areas later on in my blog. If you have any comments please don't hesitate to leave one.