Enterprise risk is one of the most significant accountabilities for a company’s Board of Directors. Managing risk is handled in many ways in different organizations, but usually there is a centralized function responsible to identify, manage, reduce, measure and communicate risk in the organization. In the best situations, everyone in an organization serves as a good, committed steward of the company’s intellectual property, facilities, data and reputation.
At Gagen, we refer to this behavior as Enterprise Risk Stewardship™. Stewardship is a form of caring, and it takes engaged employees operating in the right culture to be good stewards. As technological advancements and new regulations expose businesses to new types of risks, organizations have an opportunity to engage all employees and partners in managing those risks.
By involving leaders and employees across all levels of the organization, Enterprise Risk Stewardship™ enables organizations to:
- Anticipate and respond to emerging threats and opportunities in a proactive and agile way, including risks like those associated with the emergence of generative AI and other fast-growing technologies available to our workforce
- Align their risk tolerance and responsibilities with their organizational structure — according to Gartner, by 2027, 45 percent of chief information security officers (CISOs) will expand their remit beyond cybersecurity, due to increasing regulatory pressure and attack surface expansion
- Foster a culture of trust, transparency and collaboration among stakeholders and be sure this is part of the values and purpose you communicate with your employees
- Enhance resilience and sustainability in the face of disruption and change
- Create value and a competitive advantage in the market
To achieve Enterprise Risk Stewardship™, start by establishing a clear vision for risk management that is aligned with an organization's strategy, structure and culture. As we often recommend on large, complex initiatives, establish a cross-functional steering committee that will help guide the implementation of your strategy with a comprehensive yet agile governance structure. Once you have your vision, strategy and working team, invest time and resources toward:
- Developing a comprehensive and integrated risk framework that covers all types of risks (financial, operational, strategic, compliance, reputational, etc.)
- Implementing effective risk processes and tools that enable timely identification, assessment, mitigation and reporting of risks by all employees
- Building risk awareness and capabilities among leaders and employees through training, communication and incentives
- Engaging with internal and external stakeholders to share risk information and insights
Enterprise Risk Stewardship™ is not a one-time project or a compliance exercise. It is a mindset that requires commitment, collaboration and innovation from all levels of the business to protect and enhance the organization’s reputation and financial health. By embracing Enterprise Risk Stewardship™, organizations can navigate the uncertainty of the present and shape the future with confidence.