As a business leader thinking about operational risk, do you consider internal risks first? For example, when considering operational risk, are regulatory compliance, talent retention or catastrophic asset failures resulting in production shutdowns top of mind? When you consider external risks, do you land on those that are most obvious, such as shifts in regulatory burdens, currency fluctuations, competitive threats, etc.…? (The list goes on and on.)
Like most leaders, you probably pay attention to ongoing issues, while staying as up to date as possible about evolving challenges and threats to the business so you aren’t caught off guard.
The problem with this approach is that it leaves an organization in an inherently vulnerable position. It’s hard to truly stay up to date. External risks are dynamic because the sources of external risks are virtually limitless. It could be that public opinion is shifting on the importance of having a carbon reduction goal. It could be that all of you peers are talking about equitable pay practices and your company isn’t moving in that direction yet. It could be that a regulation is coming that your busy compliance team simply hasn’t had the time to research and determine the impact on your existing business practices.
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