Yes and no.
Our mission is to help clients achieve risk and assurance excellence.
This means doing what is right for them as opposed to what is standard and copied from elsewhere.
This means our risk appetite statement work looks and feels different from the materials you might find from a google search or a risk appetite statement template recommended to you by a well-intended board member.
A RAS is only as good as it’s thought process, and that’s what we bring to the table.
Our risk appetite work comes in four parts:
- Strategic discussions with executive and Board, which get to the fundamental core of what the organisation holds sacred and what it doesn’t.
This is not your standard risk tolerance discussion. Our approach gets right to the core of things. It fundamentally surfaces to whether your strategy, business plan, business model and balance sheet is right or not.
If you want to hire us we recommend booking us to do this work before you set your strategy, as often when we do these pieces of work, the reaction from board members is sometimes that the strategy and business plan is so far off where it needs to be that it needs to be recalled from the printers and put in the shredder. - We link this with the material risks for the organisation because these two need to be connected.
If the RAS and material risk profile are disconnected then the RAS work becomes an academic exercise or a tick box exercise.
Doing the two items in isolation is useful for stimulating thinking but problematic when reality is different from what’s in the risk appetite statement. - We ensure the RAS links to the risk impact scale so that people understand operationally where it fits within their enterprise framework.
If a team struggles to develop a risk appetite that truly informs decision-making, it’s often because they haven’t connected it to operational realities. We join this up. - We tie this into key risk indicators that actually mean something.
There is a fashionable idea that if you have a risk appetite statement (not always done well) supported by a small number of risk indicators that speak to a subset of this, then all your material risks are managed.
In our view, this is false comfort and part of the reason why organisations today seem to be getting into more trouble than previously.
We pull it together to make everything cohesive and then augment with the right supplemental risk report to truly operationalise a risk appetite statement.
When this is all done, then board and executive alignment is in place and the foundations are solid.
Phase 2: We help you pull it all together in a way that people can understand.
There’s enormous value in doing the four steps above to align the board and executive team. Success in this by itself is a massive win.
But operationalising this in a way that decision makers understand is the real juice.
This is a useful phase two after the board and executive component is bedded down. But we only go after this when phase one is complete. And to be honest, other people can do this well, its phase one that’s the hard bit.
Is that a yes or a no?
So back to the question of whether we can help with risk appetite:
Yes, but not the way other advisors do it.
It boils down to this.
1: If you fundamentally want to get this right in a way that locks in long-term value for your organisation, aligns your board and executive, stress tests strategy and business model and helps actively manages material risk (including strategic risk and business model disruption), then we’re keen. The page will help inform your brief.
2: Breathing life into what you’ve got: If you are already part way down this path and want to breathe life into it in a way that’s fundamentally impactful and useful along the lines we’ve described, that’s awesome – and you’ve already got a platform to build on. We can help you.
Re-read this article, and bring your current pain points, hopes and dreams to a discovery call.
3: If you need an artefact because a stakeholder asked you to, and people aren’t ready to tackle the fundamentals, we’re not your people for that.
Many advisors can give you something that looks familiar and will feel comfortable, but has no meaningful impact. Alternatively you can pull something from the internet.
It’s a valid place to start, but it’s just not where we start.
Doing so can cause confusion and tick-box behaviour. Life is too short and risk is too dynamic for tick box risk appetite statements. The risks and challenges are big and fast. We all need something that works.
You might not be ready or able to take this on now. That’s okay. If you’re into achieving excellence or making some big breakthoughs, maybe there’s another way we can help. Have a look at what’s on the TDA menu.