RISK FRAMEWORK AND ADVISORY

XVARO is a challenger consultancy that provides a range of services to its clients, including the design and implementation of risk management frameworks, as well as risk advisory. The  XVARO focus is significantly weighted to (but not limited to) operational risk which fits “hand in glove” with our process product offering. In practice this generally translates into the design and implementation of tailor-made risk frameworks and governance forums for its clients. In this article, we will discuss how  XVARO does this.

The importance of a risk framework

Every company will have a risk appetite which sits alongside and informs the company strategy and helps manage the delivery of strategic objectives. It may not be written down formally, but it exists. A risk framework is a critical element of any business as it helps to identify, assess, and manage risks that the organization may face in line with the risk appetite. An effective risk framework should be designed to ensure that risks are managed proactively, and the organization is prepared to respond to and mitigate potential threats.

While Risk Management is very well documented in regulated industry’s such as Financial Services, whereby the Regulator sets the rules or Guidance that need to be complied with,  XVARO sees a gap in non-financial service industries where the PRA / FCA (Financial Conduct Authority) and equivalent are not present. Risk is as important to these industries, and  XVARO’s design and implementation are often based on regulated industries but throwing out bureaucracy, and turning Risk Management into logical, relevant initiatives that companies live and breathe.

ASSESS RISK APPETITIE IDENTIFY AND ASSESS RISK DEVELOP RISK MITIGATION STARTEGIES MONITOR RISK FRAMEWORK TAILORED TOOLS

The first step in designing a risk framework is to understand the organization’s risk appetite. This involves identifying the level of risk that the organization is willing to accept in pursuit of its strategic objectives. We work with our clients to assess their risk appetite by considering factors such as their business strategy, regulatory environment, and risk tolerance. We can also if required document the Risk Appetite Statement and include it in policy.

Once we have a clear understanding of the organization’s risk appetite, we can begin to identify and assess risks. We do this in two approaches:

  1. This involves reviewing the organization’s operations, processes, and systems to identify potential risks. We then assess the likelihood and potential impact of each risk to determine its level of significance.
  2. Understanding management’s view of the risks through a series of interviews, and with responses forming part of an automated scoring system. Managements review of risk can deliver powerful data in several areas of the business.

Based on the risk assessment, we work with our clients to develop risk mitigation strategies that are tailored to their specific needs. This may involve implementing new processes, systems, or controls, or it may require changes to the organization’s culture or governance structure.

Finally, we work with our clients to monitor and review the risk framework on an ongoing basis. This involves regularly assessing the effectiveness of the risk mitigation strategies and identifying any new risks that may emerge. By reviewing the risk framework regularly, we can ensure that it remains relevant and effective in mitigating the organization’s risks.

We leave the organisation with tailored tools to ensure the risk framework and culture is embedded these include, but are not limited to:

Governance Forums (e.g., Executive Risk Committee)

Risk Register

Control Templates

Testing Plans

Risk & Control Matrix

Benefits of the XVARO approach

Tailored to the organisation’s needs: Our approach is tailored to the specific needs of each organization, ensuring that the risk framework is relevant and effective in mitigating the risks that they face.

Expertise: Our team of risk management experts has extensive experience in designing and implementing risk frameworks across a range of industries and sectors. This ensures that our clients benefit from the latest thinking and best practices in risk management.

Holistic approach: Our approach takes a holistic view of risk management, considering not just the technical aspects of risk mitigation but also the cultural and governance elements that can impact an organization’s ability to manage risks effectively.

Ongoing support: We provide ongoing support to our clients to ensure that the risk framework remains relevant and effective over time. This includes regular monitoring and review, as well as support in responding to any new risks or threats that may emerge.

Conclusion

Designing and implementing a risk framework is a critical element of any organization’s risk management strategy, and it does not need to be overly complicated, XVARO has proven this time and time again.