The amount of risk an organisation seeks or accepts, deliberately or by default, can critically influence the outcome of uncertainty - positively or negatively.
At board level, the risk appetite set for an organisation is a driver of strategic decisions, specifically those related to growth, innovation, transformation, and change.
Boards can assess the organisation’s position with a Risk Appetite Statement which summarises the amount of risk an organisation is willing to seek or accept in the decisions it makes in pursuit of its objectives.
When reading these Risk Appetite Statements, it is important to note:
- They are not a substitute for, but an adjunct to, a business’ risk management framework and activities
- They are developed to guide decision-making, particularly with respect to decision making escalation and the extent to which resources are required to be allocated in response to the level of risk which is determined to be ‘acceptable and justifiable’.
It is recognised however that risk appetite is not a single fixed concept. There will always be a range of appetites for different risks which need to be articulated, and these appetites may vary over time. Risk Appetite Statements are therefore dynamic and should be reviewed by the Board across the following categories:
- Health and safety
- Community experience
- Human resources
- Delivery of core operations and capabilities
- Service delivery
- Information management and security
AICD and BDO are currently conducting an Enterprise Risk Management Survey of directors to discern how boards are approaching this crucial part of their role. The results of the survey will feed into research that will inform the discussion around risk appetites in Australian boardrooms.
We want to know how you are deciding and managing how much risk to take including:
- Does your organisation have a risk management framework?
- Does it have a formal risk appetite statement?
- Does your organisation have a threshold for acceptable risk?
The report will provide benchmark data so you can gauge how your organisation compares to your peers. Participants will receive an advance copy of the report. The survey takes approximately 10 minutes to complete and closes on 15 December 2017.
Click here to participate in survey.