Four Ways to Improve Risk Reporting

What is it about?

Risk reporting is often unconnected with business strategy and performance, and is considered merely as a matter of compliance, which defeats the purpose of risk management. This article describes four best practices of companies that have improved their risk reporting by strengthening the vertical and horizontal communication of risks, reporting near misses, and communicating risk digitally through apps. Better risk reporting involves simplification and incentivization. It enables organizations to improve risk management and risk culture overall.

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Photo by Markus Winkler on Unsplash

Photo by Markus Winkler on Unsplash

Why is it important?

------------------------------------------------------- Contribution to Academic Scholarship ------------------------------------------------------- Despite the existence of widely adopted frameworks for risk management, its practice has much scope for improvement. This article shows how simplification and incentivization implemented in some organizations enabled them to substantially improve risk reporting, which in turn improved their risk culture. Our findings point to the promising directions for improving risk reporting. ------------------------------------------------------- Contribution to Management Practice ------------------------------------------------------- We identify four practices that can improve risk reporting, namely vertical and horizontal communication of risks, reporting near-misses, and digital communication. We describe the steps undertaken by organizations that implemented these practices, to help managers understand how they could do so in their own organizations. ---------------------------- Author Perspective ---------------------------- Risk Management is critical for preventing major organizational failures, and yet there is a lot of room for improvement in the way it is practised by even the most sophisticated financial institutions worldwide. We therefore conducted a field study, and this paper documents the best practices we observed in one aspect of risk management, namely risk reporting, that we think are worthy of being emulated by others.

Perspectives