Risk: From the CEO and Board Perspective

Risk management is no longer just a defensive measure. Implemented properly, sound risk assessments and responses can have a significant impact on a company's reputation and bottom line, and enhance shareholder value and transparency.

A sample checklist for identifying and assessing risk:

* Establish a process

* What is the organization's tolerance for risk?

* What is the process for analyzing and responding to risk?

* Strategic risk

* Are the critical strategics appropriate to enable the organization to meet its business objectives?

* What are the risks inherent in those strategies?

* Operational risk

* What are the risks inherent in the processes that have been chosen to implement the organization's strategies?

* Financial risk

* Have operating processes put financial resources at undue risk?

* Has the organization incurred unreasonable liabilities to support operating processes?

* Regulatory risk

* What risks are related to compliance with regulations or contractual arrangements?

* Information risk

* Are our information systems reliable and secure?

* External risk

* What risks have yet to develop?

The complete checklist is printed in Risk: From the CEO and Board Perspective, the fourth m KPMG LLP's series on business transformation published by McGraw-Hill. The book describes the benefits of effective risk management, explains how to shape an organization's structure to assess and manage risk in ways that will maximize shareholder value, and advocates the extension of risk management beyond traditional financial and insurable hazards. It includes case studies and interviews with Fortune 500 executives from around the world.

Risk is available at bookstores across Canada and online at www.amazon.ca and www.chapters.indigo.ca.

Mary Pat McCarthy is vice chair of the information, communications, and entertainment practice for KPMG LLP (United States). Timothy P. Flynn is the vice chair of audit and risk advisory services for KPMG LLP (US).

Copyright Institute of Chartered Accountants of British Columbia May 2004
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