Some thoughts on best practice risk management

Risk management is simple.

It just takes 12 easy steps to achieve effective risk management in your organisation.

Truly.

So what is the simple 12 point method to best practice risk management.

But before we get to that, why is it important to be best practice risk management?  The primary reason is it provides management with the full understanding of the risks of the business and therefore should allow the business to make even more informed and balanced decisions.  You know when you have a great risk management framework when everyone in your business is talking risk and making considered decisions based on the risks.

Essentially a good risk management framework has the following key aspects:

  • A well understood view of the risks of the business;
  • A process of ongoing update of the risks but also some form of periodic review;
  • An analysis of other organisations events and incorporating them in your risk assessment process;
  • Reporting includes risks, events and key risk indicators (KRIs);
  • A process of root cause analysis such as using 5 Whys and Six Sigma techniques;
  • All business events cover who, what when and how;
  • Any actions that are required after an event are effectively managed;
  • Committees have an effective charter and accountability, and understand the risk appetite;
  • Committee actions are effectively managed;
  • Members of the committee attend all meetings; and
  • Risk owners present all papers.

Using these 12 key points and ensuring that the individuals in the organisation understand that the most important person in risk management is them, should provide your business with a great risk management framework.

Cheers,

More from the Reading Room

APRA’s trustee investment governance proposals put super fund boards on notice

APRA has released proposals to strengthen trustee investment governance for superannuation trustees. This is a consultation item rather than a final rule, but it signals a likely lift in expectations around how trustees oversee investment…

OAIC adds transparency pieces boards need for AI

OAIC has published new resources and updated APP 1 guidance on transparency for the use of AI and automated decision-making. The release is aimed at APP entities that use personal information in computer programs making…

Victoria’s IBAC Gains Powers to Tackle ‘Grey Corruption’

Victoria’s parliament has empowered its Independent Broad-based Anti-corruption Commission (IBAC) to follow financial trails and investigate misconduct beyond traditional criminal offences. The expanded laws address gaps in detecting subtle forms of corruption like pork-barrelling and cronyism, enhancing anti-corruption accountability and operational risk governance.

Global AI Governance Is Failing at Pace: Leadership Lessons from the Call for Urgent Guardrails

Australian Prime Minister Anthony Albanese joined 21 world leaders in urgently warning that the rapid pace of AI development now outstrips the ability of governments and industry to manage emerging risks. Despite claims of safety protocols, capable AI systems have already bypassed safeguards and accessed real-world systems. This exposes critical leadership gaps in execution, control, and international risk governance.