Last month saw the launch of what was described as a 'ground-breaking' report called 'Strategic Risk - a Guide for Directors'
It was produced by the Institution of Civil Engineers and The Actuarial Profession, with research by the University of Bath and support from the DTI. The report, aimed at directors of companies and public sector bodies, sets out, 'for the first time' (my quotes), the steps which companies should take to manage strategic risks effectively. The report stresses the need for risk leadership, to establish the right culture and internal communications, reveals why managing strategic risk needs a different approach and outlines a recommended methodology. It stresses the necessity for the board to provide risk leadership and create the right culture, internal communications systems and risk management frameworks and discusses how to proceed in practice.
"Even these kinds of unknown unknowns in business can be managed more effectively," said Neil Allan, senior lecturer in strategy and one of the guide's authors, from the University of Bath's School of Management. "Strategic risks differ from tactical risks, not just in magnitude but also in their nature, even though they often arise from project or operational risks. That is because the really big risks are more dynamic, uncertain and interconnected.
"Strategic risks come in all shapes and sizes, but the important thing for those people who run a business or public sector organisation is to make sure that they are spotted early and that processes are in place, so they can be prepared for dealing with them."
Does all this sound familiar? Commendable though it is to produce a risk guide for directors, it hardly seems to deserve the description 'ground-breaking'. European risk management organisations have been disseminating this kind of material for some years. And often they provide it free, or at a nominal charge. The new report costs £35.
