PwC: It is important that business leaders understand that if risk is anything that an impede objectives, better risk management means better performance.

There are three (3) root causes of risk avoidance: poor risk information, stifling of creativity and culture of compliance over performance

Bridgetown, BARBADOS, June 26, 2017 – PwC argues that business growth requires, risk management, and not risk avoidance. If risk is anything that an impede business objectives, better risk management means better performance.

“The key to growth isn’t in avoiding risk; leaders must make risk management a mandate from the top down - for the board, the C-suite and perhaps most importantly, among crucial business unit decision makers,” said Bruce Scott, Risk Assurance Leader for PwC in the Caribbean. “We know that leaders must make risk management a more collaborative, measurable and strategic function. We see great immediate responses by organisations to some of the biggest growing risk factors, such as cybersecurity, but a lack of maturity in terms of embedding risk management in the strategic planning process and in daily operations.”

Scott was one of the panellist speaking at the two-day Risk Management & Competitive Intelligence Conference, hosted by Sagicor Cave Hill School of Business & Management, held at the Hilton Barbados today, June 26, 2017.

In his presentation, Moving Beyond Risk Avoidance, To Risk Management, Scott pointed out that the root causes of a culture of risk avoidance in regional and global entities included a lack of quality risk information (i.e. information about likelihood, impact and root causes of the risks), sanctions being applied for out of the box thinking to staff and a culture of compliance over performance. 

His presentation also pointed out:

• There are four (4) keys in moving beyond risk avoidance:
  • Change risk culture to show the power of risk management as a business performance driver;
  • Develop risk policy & framework to establish authority & clarity;
  • Implement a risk management governance structure (oversight); and
  • Implement a risk management operational structure (execution)
• There are five (5) risks that are “crying out” for better governance:
  • Failure to budget properly for strategic initiatives.
  • Failure to have robust business continuity plans for unique disasters, based on a worst case scenario.
  • Failure to do a separate fraud risks assessments
  • Failure to invest in world class risk and compliance staff (second line of defense).
  • Failure to invest in world class internal audit staff (third line of defense).

Tracie Bowen, Senior Manager, Risk Assurance, said: "A business continuity plan (BCP) is essential for all businesses. There need to be procedures instituted to continue business operations despite a significant and unique event (e.g. fire) that affect an entities’ buildings/facilities, Information Technology or employees.”

She added that “Many entities are still not properly prepared which speaks possibly to senior managers not fully appreciating the true value of having a BCP program. Key reasons for immature BCP processes at some organisations include not having the required expertise in-house to drive a BCP program and a lack of capital to make the required investment, due to competition for the same dollars. Both of the aforementioned can be tackled with the right degree of commitment and technical support.