In 2020, we witnessed many high-profile organisations on the front page of newspapers due to poor risk management practice. So, what can you do to prevent your organisation from the same failings in 2021?
Based on my experience, most organisations identify their risks and opportunities well. However, they fail to evaluate and understand whether their current processes, systems, and people are functioning holistically and effectively. The ASX Corporate Governance Council’s principles advise that “a listed entity should establish a sound risk management framework and periodically review the effectiveness of that framework”. A living and breathing risk management framework increases an organisation's success in achieving its corporate objectives.
Assurance mapping is a tool that can be used to evaluate the capability and competence of an organisation’s current systems, processes, and people. This tool ensures risk management practices are embedded in an organisation’s day to day activities and are not a showcase to claim that it has good governance.
Most importantly, do not become complacent. In the key findings from the banking Royal Commission final report, the Chair of Macquarie Group, Peter Warne stated Boards cannot accept the status quo. “We need to continue to challenge, to have a much bigger emphasis on compliance, and to be 100 percent sure we are doing the right thing, and not just assuming because we have policies and procedures in place that we are complying with the law,”.
Now is the time to refresh your risk management practices in 2021.
HOW CAN RSM HELP?
if you have any questions regarding your risk management practices, get in touch with your local RSM expert.