Harvard Business Review this month published an article on ‘How to Live with Risks.’  The essence of the piece is that we are looking for risk in all the wrong places:

“Risk management has historically focused more than half its time on legal, compliance, and financial reporting functions.  That’s starting to change as companies realize that most big hits to shareholder value come from strategic and operating risks.”[i]

The HBR piece goes on to state that more organizations are using Enterprise Risk Management to architect, design, deploy, and assure their risk management programs.

The HBR article offering insights into why ISO is focusing on Risk Based Thinking and upside risk assessment.

THREE TAKEAWAYS

The HBR piece has three takeaways that point to the future of ISO quality management system standards:

1.  Strike the right balance between risk and reward.

Most risk management focuses on managing downside risk consequences.  We are seeing ISO standards as well as other guidance documents moving to opportunity or upside risk management in value creation.

2.  Focus on decisions, not process.  This is all counterintuitive. Most compliance driven activities including management system certification focus on documentation and  process management. This is a critical element in ISO 9001:2050.  The challenge is there is sometimes a disconnect between process and outcomes, being able to meet business objectives, ensure profitability, and making good decisions.

3.  Employee’s first line of defense.  Risk management is all about making good decisions at each level of the organization.  Today, the management of risk may be delegated, however the right people need to have the right knowledge, skills and abilities for risk based thinking and risk based, decision making.

You can read the full article at:

https://hbr.org/2015/07/how-to-live-with-risks