Tag: risico

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COSO Enterprise Risk Management

Integrating with Strategy and Performance, June 2017

This project was commissioned by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), which is dedicated to providing thought leadership through the development of comprehensive frameworks and guidance on internal control, enterprise risk management, and fraud deterrence designed to improve organi- zational performance and oversight and to reduce the extent of fraud in organizations.

Foreword

“In keeping with its overall mission, the COSO Board commissioned and published in 2004 Enterprise Risk Management—Integrated Framework. Over the past decade, that publication has gained broad acceptance by organizations in their efforts to manage risk. However, also through that period, the complexity of risk has changed, new risks have emerged, and both boards and executives have enhanced their awareness and oversight of enterprise risk management while asking for improved risk reporting. This update to the 2004 publication addresses the evolution of enterprise risk management and the need for organizations to improve their approach to managing risk to meet the demands of an evolving business environment.

The updated document, now titled Enterprise Risk Management—Integrating with Strategy and Performance, highlights the importance of considering risk in both the strategy-setting process and in driving performance. The first part of the updated publication offers a perspective on current and evolving concepts and applications of enterprise risk management. The second part, the Framework, is organized into five easy-to-understand components that accommodate different viewpoints and operating structures, and enhance strategies and decision-making. In short, this update:

  • Provides greater insight into the value of enterprise risk management when setting and carrying out strategy.
  • Enhances alignment between performance and enterprise risk management to improve the setting of performance targets and understanding the impact of risk on performance.
  • Accommodates expectations for governance and oversight.
  • Recognizes the globalization of markets and operations and the need to apply a common, albeit tailored, approach across geographies.
  • Presents new ways to view risk to setting and achieving objectives in the context of greater business complexity.
  • Expands reporting to address expectations for greater stakeholder transparency.
  • Accommodates evolving technologies and the proliferation of data and analytics in sup- porting decision-making.
The figure illustrates the framework considerations in the context of mission, vision, core values, and as a driver of an entity’s overall direction and performance.

Sets out core definitions, components, and principles for all levels of management involved in designing, implementing, and conducting enterprise risk management practices.

Readers may also wish to consult a complementary publication, COSO’s Internal Control— Integrated Framework. The two publications are distinct and have different focuses; neither supersedes the other. However, they do connect. Internal Control—Integrated Framework encompasses internal control, which is referenced in part in this updated publication, and therefore the earlier document remains viable and suitable for designing, implementing, conducting, and assessing internal control, and for consequent reporting.

The COSO Board would like to thank PwC for its significant contributions in developing Enterprise Risk Management—Integrating with Strategy and Performance. Their full consideration of input provided by many stakeholders and their insight were instrumental in ensuring that the strengths of the original publication have been preserved, and that text has been clarified or expanded where it was deemed helpful to do so. The COSO Board and PwC together would also like to thank the Advisory Council and Observers for their contributions in reviewing and providing feedback.”

By Robert B. Hirth Jr. (COSO Chair) and Dennis L. Chesley (PwC Project Lead Partner and Global and APA Risk and Regulatory Leader)

2017 COSO ERM: Integrating with Strategy and Performance (Executive-Summary)

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Global Risks Report 2007

World Economic Forum

“At the core of this year’s overview of risks to the global community over the next decade is a fundamental disconnect between risk and mitigation. Expert opinion suggests that levels of risk are rising in almost all of the 23 risks on which the Global Risk Network has been focused over the last year – but mechanisms in place to manage and mitigate risk at the level of businesses, governments and global governance are inadequate. The global economy has been expanding faster than at any time in history – but it remains vulnerable.

Some tactical gains have been made in specific areas of risk mitigation: despite the raised threat of terrorism, cooperation on dealing with the threat continues to improve; fears of a major pandemic outbreak have driven a major effort to upgrade our global preparedness to identify and isolate new diseases; there is a growing recognition of the need to improve access to mechanisms of risk transfer in emerging markets, to allow risks to be priced in a way that allows the potential economic growth of this century to be fully unlocked.

There has also been major improvement in the understanding of the interdependencies between global risks, the importance of taking an integrated risk management approach to major global challenges and the necessity of attempting to deal with root causes of global risks rather than reacting to the consequences.

Climate change is now seen as one of the defining challenges of the 21st century – and as a global risk with impacts far beyond the environment. Effective mitigation of climate change may ultimately have the consequence of improving resilience to oil price shocks in developed countries by moving them from hydrocarbons to alternative energy sources; ineffective mitigation of climate change will almost certainly be a factor in major interstate and civil wars within the next 50 years. The way in which climate change is dealt with at the global level will be a leading indicator of the world’s capacity to manage globalization in an equitable and sustainable way.

But the tactical gains may be illusory and are certainly temporary. The manifestation of any number of global risks in the way described in the plausible scenarios in this report could quickly put those gains into reverse.

Global Risks 2007 suggests two possible institutional innovations that may help mobilize businesses and governments to approach the global risks of the next 10 years. One is the idea of a Country Risk Officer – an analogy to Chief Risk Officers in the corporate world – intended as a focal point for managing a portfolio of risk across disparate interests, setting national prioritization of risk and allowing governments to engage in the forward action needed to begin managing global risks rather than coping with them. The second is to create an avant-garde of relevant governments and companies around different global risks – “coalitions of the willing” – allowing risk mitigation to be a process of gradually-expanding alliances rather than a proposition requiring permanent consensus.

Above all, Global Risks 2007 makes the case for the active engagement of all sections of the international community in dealing with global risks. No one group has the ability to effectively mitigate most global risks. Interdependency implies not just common vulnerability, but a shared responsibility to act.

Download Global Risks Report 2007

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Global Risks Report 2013

World Economic Forum

The report analyses 50 global risks in terms of impact, likelihood and interconnections, based on a survey of over 1000 experts from industry, government and academia.

This year’s findings show that the world is more at risk as persistent economic weakness saps our ability to tackle environmental challenges. The report highlights wealth gaps (severe income disparity) followed by unsustainable government debt (chronic fiscal imbalances) as the top two most prevalent global risks. Following a year scarred by extreme weather, from Hurricane Sandy to flooding in China, respondents rated rising greenhouse gas emissions as the third most likely global risk overall.

The findings of the survey fed into an analysis of three major risk cases: Testing Economic and Environmental Resilience, Digital Wildfires in a Hyperconnected World and The Dangers of Hubris on Human Health. In a special report on national resilience, the groundwork is laid for a new country resilience rating, which would allow leaders to benchmark their progress. The report also highlights “X Factors” – emerging concerns which warrant more research, including the rogue deployment of geoengineering and brain-altering technologies.

Read online

WEFvGlobal Risks Report 2013

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Shorten the odds

Accounts Commission, Glasgow Caledonian University and ALARM (Scotland) | 1999

Risk management is a key task for managers in every organisation. In local government, identifying and evaluating the consequences of policies or actions is not always referred to as risk management. However, failure to pay proper attention to the likelihood and consequences of risks can cause the council serious problems. The financial cost, service disruption, bad publicity, threats to public health or compensation claims are among the most obvious. The effective management of risk is, therefore a critical part of councils’ approaches to delivering the sound governance element of Best Value.

This paper is aimed at managers and elected members rather than risk management experts. The paper promotes the concept of risk management and highlights good practices in managing risk effectively. It also outlines the key roles and responsibilities of managers and members in developing and implementing an all-encompassing corporate approach to managing risk. Finally, it introduces a range of tools, techniques and checklists to help managers to manage risk systematically.

Download report

Bibliography

Accounts Commission, Glasgow Caledonian University and ALARM (Scotland) (1999) Shorten the Odds – A guide to Understanding and Managing Risk. Edinburgh: Accounts Commission for Scotland.

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Global Risks Report 2012

World Economic Forum

Quote: “Economic imbalances and social inequality risk reversing the gains of globalization, warns the World Economic Forum in its report Global Risks 2012.

These are the findings of a survey of 469 experts and industry leaders, indicating a shift of concern from environmental risks to socioeconomic risks compared to a year ago. Respondents worry that further economic shocks and social upheaval could roll back the progress globalization has brought, and feel that the world’s institutions are ill-equipped to cope with today’s interconnected, rapidly evolving risks.

The findings of the survey fed into an analysis of three major risk cases: Seeds of Dystopia; Unsafe Safeguards and the Dark Side of Connectivity. The report analyses the top 10 risks in five categories – economic, environmental, geopolitical, societal and technological – and also highlights “X Factor” risks, the wild card threats which warrant more research, including a volcanic winter, cyber neotribalism and epigenetics, the risk that the way we live could have harmful, inheritable effects on our genes. Key crisis management lessons from Japan’s earthquake, tsunami and nuclear disasters are highlighted in a special chapter.”

WEF Global Risks Report 2012

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Regeren is Vooruitzien

Anno 2022 spreken wij in Nederland nu bijna 2 jaar over Corona. Als crisis wel te verstaan. Alle discussies en rapporten steken in op de  Corona-aanpak in de vorm van crisismanagement. Zowel de politiek, het bestuur, de media, de wetenschappelijke adviesraden en de zorgsector zelve zijn opgenomen in deze dans van reactie en reductie.

Covid-19 is gezien haar schaal een nieuw fenomeen, een grote pandemie, iets dat ons overkomt. Of lijkt te overkomen. Dat is natuurlijk niet het geval. Er waren immers veel meer zekerheden dat er iets zou gaan gebeuren dan de veelal gesuggereerde en gebruikte onzekerheden.

Onze eigen mensengeschiedenis verschaft ons veel informatie of eerdere pandemieën, en vooral de dierenwereld én de plantenwereld staan erom bekend, dat door uitgebreide monocultures de feedback-mechanismes in systemen worden stilgelegd, of liever omzeild door bacteriën, schimmels, parasieten en virussen. Het leidt permanent tot vele vormen van pandemische uitbraken. Wellicht zijn wij eraan gewend geraakt dat periodiek vele dieren het veld moeten ruimen om in de beteugeling van de pandemie te voorzien. En wij weten dat onze landbouw vele vormen van intensieve bestrijding toepassen om het voedsel op onze borden te krijgen.

Wij hebben het eerste Global Risks Report van 2005, gepubliceerd door het World Economic Forum in de vorm van Global Risks to the Business Environment, er nog eens op nagelezen. En natuurlijk aansluitend de rapporten die jaarlijks volgden. Wat weten wij nu bijna sinds 2 decennia? Althans op basis van deze reeks van rapporten. Telkens werd de mogelijkheid en reële kans op een pandemie gemeld en onderbouwd als risico voor de samenleving en economie. Quote:

Pandemics – infectious diseases: the expansion of trade and greater mobility associated with globalization, together with the encroachment of humans into natural areas, growing resistance to drugs and changes in climate are increasing the risk of a major outbreak of infectious diseases. Some infectious diseases are new or relatively new (e.g., HIV/AIDS, SARS), some are re-emerging (e.g., TB, cholera), and some are shifting geographically (e.g., West Nile, Dengue fever). There is particular concern over the spread of infectious diseases from animals to humans; public health officials have warned, for example, that an outbreak of avian flu could kill millions of people and cause major disruptions to markets and travel worldwide. The risks are amplified by the woeful inadequacy of existing public health services to prevent, detect and/or respond to the spread of infectious diseases.

Overzicht uit rapport ‘Global Risks to the Business Environment 2005’, pagina 6.

Wij weten inmiddels ook dat deze rapporten niet of nauwelijks zijn geland op de burelen van topmanagers, bestuurders en politici, terwijl zij toch wel wereldwijd zijn besproken en gecommuniceerd. Of misschien wel zijn beland, maar in de la zijn verdwenen. De vraag is hoe dit kan. Het rapport in 2005 hierover doet zelf reeds de constateringen gerelateerd aan de besturing en leiderschap:

The “Governance Gap”: by definition, global risks transcend national boundaries. There are only a limited number of global institutions to address global risks, and there is ample evidence that neither these institutions nor nation states are responding to global risks in the most efficient or effective way. Many existing governance structures tend to be too compartmentalized or fragmented, and many business leaders are compelled to focus on their short-term bottom lines. A fundamental discrepancy exists between the time- horizon of political and most business leaders and the long-term nature of most global risks, which results in most risks being dealt with in a purely reactive way.

In a nutshell, short-termism prevails: business cannot respond in time because the pressure to produce strong quarterly results collides with the long-term perspective needed to address most global risks. If companies try to address the issue in earnest, they can be punished by the markets. The same is true for politicians: their willingness to tackle the problem is most often bound by the time- horizon dictated by the electoral cycle. Indeed, the challenge of dealing with long-term global risks is compounded by the fact that the tenure of most business leaders is less than five years.

The “Leadership Gap”: difficulties caused by the governance gap are compounded by a leadership gap, both at the international level and in terms of mobilizing society. This generates a “pass the buck” strategy where risks are being redistributed from the core to the periphery. For example, many health, poverty and environmental risks are being transferred to those with the least capacity or resources to solve them: developing countries, for example, or low-income populations in Western countries, or even future generations.

Some major risks, such as the current account deficit in the US, the impact of climate change or the welfare of an ageing population, are being transferred to future generations. Others, such as global security, are being transferred to one single country, either willingly or by default.

The main concern is that the transfer of global risks in this way may reduce the world’s capacity to respond satisfactorily in the long term. Some might argue that countering such transfers of risk from the core to the periphery belongs solely within the sphere of governmental institutions. But can business really sit back and leave the future of their markets to others?

Een integrale diagnose voor de start van elke bestuursperiode zou een formele stap dienen te zijn voor elk bestuurlijk akkoord. Stichting Civitas Naturalis pleit hiervoor. Zij beschouwd een goede diagnose als een natuurlijke eerste stap (Wat is de kwestie die voorligt en hoe is deze ontstaan?) naar goed bestuur.

Behoefte of beter nog noodzaak zou er moeten zijn voor elk bestuur om haar plannen voortaan verplicht te baseren op bestaande onderzoeksrapporten en niet politieke ambities en wensen en zeker niet op strategie en beleid dat niet kan worden geïmplementeerd. De kiezer en haar volksvertegenwoordigers zijn er om dit af te dwingen en te controleren. Zou kunnen en zou moeten. Dit overigens met de voor haar geschreven Grondwet in de hand. Goede besturing kan echt. Dit spreekwoord getuigt van ons culturele erfgoed en van de collectieve wijsheid die wij bezitten: regeren is vooruitzien. Doen dus.