Risk Management Ideas

Risk has as one of its essential elements TRUST as a foundation.

Trust on the other hand has many other factors that interplay and interact on it.

Markets are created when there are needs that are not immediately met from you local environment and therefore scarcity exists.  Market participants step in to fill this ‘needs’ void.

English: Risk management sub processes
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As for any subset of Risk, either Operational, Market, Liquidity, Interest, etc. a big part of the assessment process it not just about looking inward and assessing the risk profiles, risk attitudes, risk systems, etc., but an important part of the process is stepping into the realm of uncertainty and looking outwards and the wider market context we find ourselves in.

Being too prescriptive about the individual risk profiles and control systems will only stifle innovation and growth.  Some say we need a very healthy dose of growth right now, whereas others are content with the new world order of the ‘anti growth economic’ bias (our description of austerity) we have already entered in the Western Hemisphere.

Our positive risk management framework, also known as Value Oriented Risk Management encapsulates both risk and uncertainty management and combines it with the best offerings of Value Based Management.  (For more information or to contact us, please click on the Contact us link or read the article entitled “The Intersection – Where Risk, Value & Reward link by clicking on the embedded link.

Our Value Oriented Risk Management is the positive Risk Management focus, acting as an enabler ensuring that you unlock value in your organisation a midst the regulatory compliance constraints added to your management agenda.

TheMarketSoul ©2010

The trouble with Innovation – Part 4

Risk!  This will be the main theme of this part of the series we are investigating.  As highlighted in part 3 Risk Management and Sustainability are key factors to consider in unleashing Innovation and creativity in the organisation’s life cycle.


However, in the word life-cycle we already have a clue as to the inevitability of decline and ultimately the death of the enterprise, per se.


In the current climate, Risk Management has a pure Compliance and Regulatory connotation.


We assert that there are two sides to the Risk Management coin:


A Negative and Positive approach to Risk Management.  In the negative worldview, risk is associated with mitigating and loss prevention strategies, namely compliance and regulatory requirements in addition to downside risk alleviation.


A Positive Risk Management framework would look to the up side and Value Creation potential of enterprise governance frameworks.


The overall philosophy and practical application of the model is embodied  in a sound risk management framework underpin by the convergence of Internal Auditing and Financial Controls and the Value drivers inherent in the Value Based Management approach, namely

(1)    Creating Value

(2)    Managing Value

(3)    Measuring the Value created

The focus in measuring and managing for value and thus superior organisational performance is encapsulated in performance and investment drivers such as:

  1. Sales Growth
  2. Operating  Margin
  3. Cash Tax rates
  4. Fixed Capital Investment
  5. Working Capital Investment
  6. Cost of Capital
  7. The Planning Period


Creating Value


The departure point in creating value ultimately has to have Innovation as one of the factor inputs required to create Economic Value in any organisation.  This in combination with other economic factor inputs such as capital, land and labour are the foundation building blocks of any organisational sustainable growth approach.


Therefore, combining resource inputs such as capital and labour with innovation, in the right mix and during the right time frame are the sustained growth drivers in any organisation.


In the next article in this series we will address the next step in the Value Based Management framework, namely ‘Managing Value’ and the further step of ‘Measuring the Value created’.

theMarketSoul ©2010