Page 45 - The Corporate Report Pack

How risky is your business?
through strategy setting, formulating high level objectives, and approving broad-based resource allocations. Board members should also be alert for organisational and market dysfunctional behaviour that can lead to excessive risk-taking.
Are we saying then that training in counterfactual thinking should be a requirement for every member of the board?
Counterfactual thought processes
Counterfactual literally means contrary to the facts. is is a method of thinking thoughts that consist of the ‘What if?’ and the ‘If I had only ...’ when thinking of how things could have turned out di erently. Counterfactual thoughts are things that could never possibly happen in reality because they solely pertain to events that have occurred in the past. is form of thinking lends itself more to exceptional events rather than normal events. At board level, this type of thinking could well lead to dysfunction of the very requirement of the organisation, which is to survive and thrive!
• operating closely with other sectional heads • discussing problem areas
• improving safety measures.
e risk manager today needs:
• proven and recognised competence
• strong communication and team-playing skills
• a systemic and analytical approach coupled with
the ability to synthesise situations into risk factors • a provocative approach
• problem-solving skills
• emotional intelligence and empathy
• exibility
• innovative and lateral thinking.
A risk manager must understand the systematic risk present – that is the risk to the whole system in which the organisation operates. ey must also understand how to de-risk the unsystematic risk.
Unsystematic risk is risk of the organisation itself or sector in which the organisation operates. For example, in 1997, the sector in which Wyeth’s predecessor, American Home Products, operated in attracted
A risk culture can be said to be the willingness of all the participants in an organisation to accept or deal with risk.
Business growth ideas come from boards who o en have a way of clouding the downsides, so there must be someone who needs to o er a balanced perspective. at person should be the chief risk o cer or a senior risk manager.
A risk manager cannot be a yes-man!
Gwendolyn Collins, who heads the Federal Reserve System risk policy, and systems and operational resiliency policy teams, said the role of risk managers had become more strategic than in the past. A risk manager cannot be solely responsible for managing the risk of the business and should not be responsible for audit testing of internal controls they personally put in. In the more successful risk management programmes, this is a collective responsibility, with the risk manager at the very least
the Food and Drug Administration’s attention. is resulted in the companies forced withdrawal of two types of anti-obesity pills, comprising fen-phen (fen uramine and phentermine) from the market. is was one of the costliest drug recalls in history.
Whoever the board decides to appoint in this role as risk manager must be capable of understanding and translating strategic risk into the operational, nancial and tactical risk reactions required, within acceptable parameters, while remaining aware of the market in which they operate.
Strategic risk
In any business, strategy is driven by the organisation’s purpose and desired objectives; it is the tool needed to be successful. At the corporate level, the strategy group
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