WolfPAC Integrated Risk Management Blog

What Your Institution Needs to Know to Create a Comprehensive Risk Governance Strategy

| Author
Wolf & Company, P.C.

It is important to the success of your institution to have a robust risk governance strategy that allows you to better manage changing regulatory demands and the introduction of new products and services. Here is a breakdown of the important components necessary to build strong risk governance in your institution.

Define Your Risk Appetite

Your risk appetite is the amount and type of risk your institution is willing to take in order to successfully complete their strategic objectives. Therefore, understanding your risk appetite has a crucial impact on how your institution can safely grow and change. Define your risk appetite by considering the skills and resources necessary to manage risks throughout your institution. Identify Key Risk Indicators (KRIs) that need to be monitored as part of this management. Your risk appetite should be reviewed regularly to take into account changing industry conditions, as well as internal changes to your institution.

Communicate Risk Effectively

Learning how to engage your board is key to effective risk governance. With so much information to report on, sometimes crucial points can be overshadowed by less pressing data. One helpful tool in managing these conversations is maintaining the agenda. The meeting agenda can be a powerful tool a risk manager can use to ensure areas with the highest importance are acknowledged and communicated, fostering risk management buy-in from your board.

Build a Proactive Risk Culture

This comes as no surprise, but the regulatory environment is always changing. The constant tide of regulatory requirements and demands necessitates an Enterprise Risk Management (ERM) program that is responsive to these regular changes. This is also true of emerging risks. It is important that your institution have an ERM program in place that is flexible enough to mitigate emerging risks before they have the opportunity to seriously threaten your organization.

Risk governance needs to be a holistic effort throughout the organization that helps move your institution toward meeting your business goals. Complete understanding, effective communication, and an agile ERM program work together to create this holistic approach.

Hear more about risk governance, and receive hands-on training from the WolfPAC Solutions Group at the 2016 Risk Governance Workshop, hosted by the California Bankers Association (CBA) and sponsored by WolfPAC.

TOPICS: Risk Appetite Statement Risk Governance Key Risk Indicators

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