Being smart about the risks you take: Get up to speed*

A leading financial institution wanted to increase its market capitalisation by more effectively linking its decisions about risk and return to its growth objectives. With PwC's help, it explicitly articulated its risk-management goals, governance structure and processes, and risk appetite. It then communicated its aims - in terms both of risk management and of growth - to everyone in the organisation and embedded the changes.

When a global oil and gas company was considering whether to make one of the largest private asset investments in Australian corporate history, it concluded that it needed an independent opinion. So the board called in some risk experts to assess the proposed investment in terms of the risk it represented and the value it might bring, and determine whether the investment was credible. Within four weeks of embarking on the review, the risk experts had completed a full analysis of the risks associated with the project, enabling the board to make its investment decision armed with a much better understanding of the risks and a more robust plan for managing them to maximise the value of the deal.

When a leading telecoms company wanted to upgrade its business systems, it recognised that it had two choices; it could either incorporate risk controls as part of the upgrade or install them afterwards, as it had previously done when making major changes. Since retrofitting the controls had proved very expensive, it decided to do everything at the same time. The company began by setting up a controls advisory office staffed by people with risk and controls experience. It then appointed individual advisers to each of the teams responsible for changing a business system or process, to help them design controls into the systems or processes before going live. The company is now partway through the upgrade and confident that the switch to new systems will go smoothly. It also believes that it has embedded its attitude to risk much more firmly within its corporate culture by putting controls advisers on the business teams involved in making the changes.

Concerned by the number of customer complaints it was receiving, a leading fund manager decided to review its operations from a risk management perspective. This rapidly showed that it had two different cultures in its front and back offices, and that the people in each office were pulling in different directions. The front office was very good at getting new products to market, but the back office lacked a proper operational framework and was struggling to keep up with the changes. Individual employees were maintaining their own records, but they were not sharing the information, so things were going wrong. As a result, the people in the front office did not respect their colleagues in the back office, and an "us and them" mentality had developed. The review highlighted various options for improving the back-office operations. It also identified how the gap between the two offices could be closed by giving everyone a clear role to play, empowering them to perform those roles and ensuring that their respective contributions were recognised.