Align Risk Management with Strategic Goals

The Project Management Institute says that projects are 20% more successful if they seek to support company strategic goals rather than project specific goals as their primary focus.

That sounds like something that may be an extremely important idea to bring into risk management.

Risk Management should focus primarily upon company strategic goals rather than specific risk goals.

How does that sound to you?  Riskviews imagines that at least some readers are immediately reacting that this idea will not work because the company does not have a strategic goal that would support their function.

And that sounds like a major insight about organizational engagement in and support for risk management.  If risk management does not directly support one or more of the strategic goals of the firm, that speaks volumes about what will happen when there is a conflict between something that IS aligned with the strategic goals and risk management.

The story of MF Global is an extreme example of this conflict.  The management (read CEO) actions of MF Global were totally outside of the agreed upon risk appetite.  The CRO brought that to the board attention and the board decided that those actions supported the goals of the organization, while adherence to the risk appetite was of lesser importance.  The CRO left and the actions eventually led to the destruction of the firm.

Here is an example of the Mission and Vision Statements of an insurer

Mission Statement

Providing financial security by keeping our promises.

Vision Statement

To build a thriving financial services organization that stands the test of time.

Risk management definitely has plenty of room in that firm to align with the mission and vision of the firm.  “keeping our promises” and “standing the test of time” are both clearly statements about how the organization intends to handle risk.  The mission and vision of that firm cannot be met without risk management.

Here is the mission and vision statements of JP Morgan Chase

“At JPMorgan Chase, we want to be the best financial services company in the world. Because of our great heritage and excellent platform, we believe this is within our reach.”
“To provide unparalleled service to our clients by empowering them with strong analytical insights that enable them to more effectively manage their human assets.

It is not clear to Riskviews whether or not risk management activities are called for at all with that mission and vision statement.

So if you are wondering what might happen when there is a conflict between risk management and a business activity look to your firm’s mission, vision and strategic objectives.  If you do not see risk management there, you have your answer well in advance of any future conflict.

Explore posts in the same categories: Enterprise Risk Management, Governence

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