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Strategic Risk – a Guide for Directors
Strategic Risk – a Guide for Directors

Press Release - 11 May 2006

New guide helps businesses deal with bird flu and other risks

A new guide which helps company bosses manage the risks posed to their business by everything from bird flu to a loss of reputation was launched by industry leaders in London this week.

The guide, developed using research carried out by the University of Bath, contains a checklist to help company directors and senior managers ensure that their business procedures can deal with the strategic risks that their organisations face.

Strategic Risk – a Guide for Directors (STRATrisk), has been produced by the Institution of Civil Engineers (ICE) and The Actuarial Profession, with research by the University of Bath and support from the Department of Trade and Industry.

The guide reveals why managing strategic risk needs a different approach and outlines a recommended methodology. It stresses the necessity for the Board to provide risk leadership and create the right culture, internal communications systems and risk-management frameworks and discusses how to proceed in practice.

The accompanying CD-Rom, produced by the University of Bath, includes information on aims of the project, the enabling processes, the underpinning knowledge and also software and video demonstrations.

“Even these kinds of unknown unknowns in business can be managed more effectively,” said Neil Allan, Senior Lecturer in Strategy and one of the guide’s authors, from the University of Bath’s School of Management.

“Strategic risks differ from tactical risks, not just in magnitude but also in their nature, even though they often arise from project or operational risks. That is because the really big risks are more dynamic, uncertain and interconnected.

“Strategic risks to businesses come in all shapes and sizes, but the important thing for those people who run a business or public sector organisation is to make sure that they are spotted early and that resilient processes are in place so they can be prepared for dealing with them when they arise.

“This kind of risk leadership within an organisation is essential for the establishment of the right culture and internal communications systems.

“Businesses without these kinds of procedures in place run the risk of falling at the first hurdle each time something beyond their control challenges the way they operate.

“This is the first time that guidelines to strategic risk management have been produced, and, if they are applied successfully, shareholders will be reassured, board and executive management teams will be more confident, and staff will feel more secure.”

“Reading this report will make company directors think hard – and few will decide to ignore its cogent and direct advice,” said .

Dr Martin Barnes, Executive Director of The major Projects Association and President of The Association for Project Management, said: “Reading this report will make company directors think hard – and few will decide to ignore its cogent and direct advice.”

Mike Nichols, Chairman of the STRATrisk group and Chief Executive and Chairman of the Nichols Group, said: “There is simply too great a waste of resources because at present, there is a failure to properly assess risk.

“Far too many companies fail unnecessarily and we hear much too often of serious problems in the public sector.

“As a result, customers are disadvantaged, employees are at risk of losing their jobs and vast sums of money are lost.

“Most of those in charge of enterprises need to get their act together and pay more attention to the key risks.”

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Notes

Strategic risk is one of three risks identified by the partnership. “RAMP: Risk Analysis and Management Projects”, launched in 1995, was the first of the reports recommending how companies could seek to mitigate project risk.


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