Don't bore the board: Prioritising key risks in your report

2 min read
Jul 12, 2023 1:06:55 PM

When presenting a risk report to the Board, it is not about inundating them with every detail, but rather highlighting the most critical factors that focus the Board on the key issues they need to be discussing and exploring.

In doing so, the Board is empowered to make informed choices that shape the future of the communities they serve. Taking into account the following key considerations will enhance the efficacy of risk reporting and ensure a Board culture that embraces strategic opportunities arising from preparing for and managing these risks.

First, Prioritize. Identify the top three, four, or at most five key risks that demand the ongoing attention of the Board. These risks should be the ones that possess the potential to significantly impact the organisation's strategic objectives. By emphasising these select risks, we allow the Board to focus their attention and energy on what truly matters. The responsibility of assessing other risks can be effectively delegated to the Finance Audit Risk committee or the Risk committee. The simplest and most effective way to identify these few key risks is to identify those with the highest potential to occur, the largest impact if they were to occur, and the lack of any existing controls over this risk. This can be used with both existing risks and possible emerging risks (e.g. Artificial Intelligence).

Second, Insight. When reviewing your Board reporting, it is essential to strike a balance between providing meaningful insights and avoiding an overwhelming influx of unnecessary details. Remember, the Board's role is not to wade through volumes of data that may not translate into actionable outcomes. Instead, the Board needs a clear understanding of the prominent risks that demand their attention, and the insights to be discussed and monitored that drive the organisations vision and strategy. Tailor your risk reporting to resonate with their strategic decision-making process, capturing their interest and ensuring their time is utilised strategically.

Third, Opportunity. To foster a culture of effective risk management within the Board, we must evaluate our approach to risk. Are we merely viewing risk as a compliance issue and focusing solely on risk mitigation? Or do we embrace risk as an opportunity for strategic advancement? It is crucial to foster a mindset that acknowledges risk as an inherent part of growth and innovation. By reframing our perspective, we enable the Board to envision and seize strategic opportunities that may arise from navigating risks effectively.

Fourth, Accountability. We must align our performance indicators (KPIs) and success measures for the CEO and senior executive team with the identified top risks. It is essential to have key performance indicators (KPIs) that reflect the organisation's risk landscape. By doing so, we ensure that our CEO's goals and objectives are intrinsically linked to the risks that matter most. This alignment not only promotes focused decision-making but also reinforces the organization's commitment to proactively manage and mitigate risks. These KPIs should be linked to strategy, opportunity, and measure outstanding performance, not just maintain a risk register.

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