Strategic Risk Management Requirements The concept of a streamlined approach to strategic risk management is simple:
1. Consider all types of risks that could potentially impact the institution
2. Understand the relationships between those risks and proactively manage risk to
effectively risk-adjust strategies and optimize delivery
3. Take a forward-looking approach to risk management and stress test strategies
against a range of possible market scenarios
This approach increases an institution's ability to predict the risk/return tradeoff
associated with new strategies, as well as their potential impact on capital, liquidity,
compliance and general institutional health to support sustainable growth and protect
stakeholders.
Supporting Sustainable Growth All types and sizes of institutions can implement strategic risk management and
likely achieve significant performance improvements. As a best practice, strategic risk
management starts with enterprise performance management, which helps institutions
develop strategies to effectively balance risks with returns, improve business
performance and support sustainable growth.
Leading enterprise performance management systems support an integrated suite
of performance management technologies. The tools analyze the financial health of an
institution and assess how interrelated risks could impact future success. All financial
risks are analyzed in terms of key factors that drive institutional success, from growth
and profitability to operational efficiency and the effective deployment of capital.
Strategic risk management enables institutions to design and deliver strategies
and financial plans that are properly risk-adjusted in order to protect assets, increase
performance and competitive advantage, and maximize value for stakeholders and
customers long term. This approach provides a clear view of operational and financial
risks – and their potential impact on capital and liquidity.
