Question

You have been asked to advise the Akawini management team how they should promote and monitor the transformation of risk management in their business. What performance measures would you recommend they use so that they can monitor progress and performance?

Answer 1

Answer with Explanation:

To transform the risk management and promote the transformation process, Akawini must:

• Implement Corporate Governance policies and enforce compliance with these guidelines.
• Consistent Internal Control Reviews by conducting internal audits.
• Compliance with the Sarbanes Oxley Act and Foreign Corrupt Practice Act will enable the risk management team to consider a wider aspect of its operation which includes domestic and foreign export policies enforcement.
• Continuous Professional Development and advanced training will help them to act very efficiently and effectively minimize the level of risk the company is facing.

The progress is the process of movement towards achievement of goals and performance is the better movement towards achievement of goals.

To measurements that can be used to monitor progress and performance would be use of Key Performance Indicators and comparing the results with the actual results of company. This would help in understanding the under-performing areas and hurdles to progress. Some KPIs that the risk management team can consider are Value at risk reduced, risk threshold set, Risk to Rewards Ratio, etc.

Cost and Benefits of risk mitigation analysis will also be beneficial here because it helps the risk management team to consider the financial aspect of the decision making and thus helps in adding value to the business operation.