Setting strategy in a vacuum is a fool’s errand. Protiviti’s Jim DeLoach offers five tips on how companies can best consider risk when developing strategy.
Lessons over the years point to the importance of integrating risk into strategy-setting. If this integration theme is ignored, risk becomes an afterthought to strategy and an appendage to performance management. In an age when disruption is the norm and not the exception, this should never happen.
Risk to the execution of the strategy as well as from the strategy itself are two important dimensions for senior executives and their boards to consider. A third dimension is the strategy being out of sync with the organization’s core values.
All three of these dimensions are emphasized by the Integrated Framework on Enterprise Risk Management of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In reflecting on learnings over the years and the guidance from COSO, here are five considerations for executives and directors to keep in mind when integrating risk into the process of formulating and executing strategy.
What we don’t know may be more important than what we do know
Focusing on what we don’t know may, to some, seem to be an oxymoron….
