22nd May 2000

Integrated Risk Management: Rhetoric and Reality

In recognising the need for robust and comprehensive management of all business risks as part of good corporate governance, there is a lot of rhetoric about ‘holistic, integrated risk management’. What is the reality? Studies, confirmed by senior risk managers, suggest that whereas some 30% of large organisations claim to have such a strategy, less than 10% have one in practice.

In an article in the May/June 2000 edition (Volume 5 Number 6) of InfoRM, the official journal of the Institute of Risk Management (IRM), I identify four different types of response in practice:

	Strategy	Typical Reasoning
1.	Prescriptive compliance	We haven’t done this before. Our culture tends to be static, with either minimal or slavish compliance with external regulation.
2.	Problem focus	We already have a system of internal controls and wish to concentrate on areas of poor risk performance or changes in context.
3.	All-risks review plus robust Risk management System	We wish to validate our risk focus and controls in order to strengthen business strategy and enhance shareholder value.
4.	Comprehensive risk decision support	We need an Intranet-based decision-support system to enable users in different functions to make better informed risk decisions; incorporates 2 and 3 and counters ‘silo’ culture.

For more details on that article and InfoRM, contact Andy Smith at ams@centrenet.co.uk.

For details of the Institute of Risk Management visit www.irmgt.co.uk or contact enquiries@irmgt.co.uk.

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