presentation for risk management

How to Make Risk Management Presentations Engaging and Actionable Across Your Organization

Life is full of risk. We face risks from the moment we wake up in the morning until we fall asleep at night. Will the alarm fail to sound? Will I get into a car accident on my way to work? Will I catch a virus when I go to dinner? Heck, there’s a risk— no matter how small— that we will die in our sleep during each night.

Risk is simply an inherent element of everything we do, and business is no exception. Will a vital employee quit, or will there be a labor shortage? What will happen in the stock market, and how will it impact the economy? What if there is an accident or a lawsuit involving the company? What happens if a new product fails? What actions will be taken in the event of a security breach or equipment failure?

We might not be able to prevent risk, but we can manage it. Managing business risk requires identifying and understanding risks while seeking ways to reduce risk in a way that also supports other business goals.

Companies heavily invest every year in ways to mitigate and respond to risk. But how do they make sure everyone is on board? 

There might be a variety of ways to communicate a risk management plan to all the relevant players, but a visual presentation can be effective in not only presenting the risk management plan, but also ensuring that it is engaging and actionable across your organization.

What to include when you prepare a risk management plan:

A written risk management plan for business should not only include a listing of possible risks, but it also should feature plans to manage risk and respond to incidents.

• Identify risks

Risk management refers to a variety of business aspects, both internal weaknesses, and external threats. Like much in life, knowing is half the battle, and therefore identifying risks is key in addressing them. 

Risk management should be considered before embarking on any new task or project, and everyone connected to a business should be encouraged to identify additional risks. Not only should the risk itself be considered, but companies also should identify possible consequences to better prepare to address each one.

• Minimize risks

A variety of strategies are available to manage and minimize risks once they are identified. One popular method of mitigating risk involves the 4Ts:

• Transfer risk by assigning a responsible team or party to each identified risk.
• Tolerate risk by monitoring it before taking further action.
• Treat risk by taking actions that reduce the likelihood that it will occur.
• Terminate risk by adopting or amending processes that eliminate it.
• Assign roles

Staff members should be assigned to each potential risk or risk category. These individuals will be responsible for mitigating their assigned risks, as well as reporting and responding to applicable incidents. A list of these roles should be included in the risk management plan.

• Plan recovery

Each risk included in the management plan must be followed by a strategy for preventing and addressing issues. An effective risk management plan will include a compilation of business projects, the risk applicable to each and an operational plan to respond and recover from incidents. Part of that plan also should include updating mitigation efforts following an incident to prevent it from repeating.

• Communicate plan

A risk management plan can’t be effective unless everyone within a company is on board. In addition to presenting the plan to principle players, be sure that it is also published somewhere that the full risk management plan can be accessed and understood by anyone within the company at any time.

• Rinse and repeat

The most effective risk management plans are living documents, continually updated with new or changed risks and new strategies to address them. Each risk outlined in the plan should be periodically reevaluated and new risks identified. The plan also should be monitored along with staff turnover to ensure no tasks fall through the cracks.

Tips to make risk management presentations engaging and actionable across your organization:

Audience engagement is vital to a successful risk management training presentation. After all, if staff and executives are asleep they will hardly become familiar with the plan and their assigned roles.

• Include visual assets

About 90 percent of human thought is visually-based. Therefore, it’s no shocker that including visual assets within a presentation is one of the most effective strategies for engaging all types of audiences . 

Releasing the risk management plan through a visual presentation is a great start, but the content within the slide deck is just as important. After all, the average PowerPoint slide includes 40 words , which is entirely too many. Instead, include more images, videos and animations within a financial risk management presentation or any other risk management training presentations.

• Illustrate data

Data is one of the most convincing sorts of content that can be presented to an audience. As anyone can attest— at least in most cases— numbers don’t lie. In fact, they can tell their own stories. A crowded slide full of stats and figures is a quick way to send your audience off to Dreamland. 

Instead, illustrate your data through infographics. Beautiful.ai offers a host of various infographics through our smart slide templates. Just input your data and watch our artificial intelligence-powered presentation software design the infographic accordingly. Choose from infographics like scattergraphs , process diagrams , pie charts and bar graphs to tell the story of different risks and strategies to address them.

• Tell a story

According to the 2018 State of Attention survey, almost 90 percent of respondents said a strong narrative or story backing a presentation is critical in maintaining audience engagement. Sure, facts and data can persuade audiences and get them on board, but only if people are paying attention. 

Stories have kept audiences engaged since before recorded history. Tell the story of your risk management plan by including real-life examples or by creating a character for hypothetical scenarios. Those unsure how to incorporate a story into the structure of their presentation can look to Beautiful.ai’s various presentation templates for inspiration.

• Include your audience

If you really want to keep your audience engaged with your risk management presentation slides, be sure you talk with people, not at them. Include your audience in your presentation by asking questions, taking surveys or presenting group activities. Of course, the first step is identifying who makes up that audience. You won’t necessarily present the same content to an executive board as to a room full of new hires.

One effective way to engage an audience with a risk management plan presentation from the very start is through a pre-presentation quiz or survey that gauges how much participants already know about risk management, like this example from the U.S. Small Business Association. Not only will the activity engage the audience, but it will alert participants to what they don’t know from the very start. Other engagement tools include Q&A sessions, humor and gamification.

As mentioned, the average PowerPoint slide consists of 40 words… way too many to keep audiences engaged. Remember, your presentation should be based on an outline of your plan, not a verbatim recitation of it. 

Not only are uncluttered slides more effective, but shorter presentations also are more effective than longer ones, based on both audience attention and respect for time. Especially when delivering a risk management board presentation, it’s vital to respect your audience’s time. Beautiful.ai’s library of presentation templates can serve as a guideline to effective presentation lengths for a variety of topics.

Samantha Pratt Lile

Samantha is an independent journalist, editor, blogger and content manager. Examples of her published work can be found at sites including the Huffington Post, Thrive Global, and Buzzfeed.

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Home Blog Business Risk Management Techniques

Risk Management Techniques

Risk and business cannot be separated! For an entrepreneur, the possibility of a loss is as real as the possibility of profitability; what lies in between the two is risk. In simple terms, the risk is the possibility of loss for a business, with financial implications. There are risks that are avoidable and risks that need to be better managed to reduce the likelihood of negative consequences.

Basic Elements of Risk Management

Risk management is the identification, assessment, and controlling of risks. Businesses around the world plan and spend a significant amount of money in managing risks. However, risk management has implications beyond business. Risk management is applicable for businesses and disaster management and can even be used by an individual at the  household level . The latter can be a form of financial management, retirement-related risks, and identification of financial shocks that can affect a household.

Risk management broadly has five basic elements, covering the structure of how it can be incorporated for anticipating and controlling risks.

1. Identify Threats

In order to anticipate and manage risks, one must first identify what might be deemed as a risk. For a business, it can include the possibility of financial loss, an injury to an employee, the possibility of a lawsuit, accidents affecting customers, etc. These risks can arise due to a number of factors, be it economic conditions of a country, competition from competitors, lack of safety measures at the workplace for employees, faulty products, and the like.

2. Assess Vulnerability of Critical Assets

The next step includes an evaluation and assessment of risks. This is to identify the vulnerability of critical assets due to the risk. For example, if there is a production process that can lead to an employee’s injury or death, there seems to be a high probability of such an accident occurring. Such a process needs to be changed or replaced.

3. Determine the Threat the Risk Poses

Different risks can pose different types of threats. An injury caused due to a hazardous production process can lead to a lawsuit by the employee, cause reputation damage, and might even lead to a decline in sales due to bad reputation.

4. Reducing Risks

There are several ways that businesses can reduce risks. If a production process has the potential to cause harm, it might be worth revising how the process is carried out or finding alternative methods for performing certain tasks to make the process safe. There might even be a need for safety equipment or machinery and regular equipment inspection and maintenance that can help manage such a risk in a better way by reducing the probability of an accident. Some risks however can be hard to reduce. This might include accounting for an economic meltdown, economic policy changes due to a change of government in a country, or viz majors like the COVID-19 pandemic or an unforeseen natural disaster.

5. Risk Reduction Measures

Risks can be categorized, (e.g., low, medium, or high). It isn’t necessary for a business to try to manage all types of risks, since the possibility of some risks might be negligible, and committing resources for them might be very expensive. Risk reduction is a process that cannot be viewed in isolation. Organizations need to perpetually monitor risks and account for course correction if and when necessary.

Managing Different Types of Risks

Risk management entails various types of strategies, such as risk reduction, risk avoidance, risk sharing, and risk retaining. We covered these strategies in detail in our previous post about risk management and risk assessment . In the section below, we will provide you with examples of different types of risks a business might face and what can be a few ways of managing such risks.

Market Risk

When it comes to imagining risks, investors usually consider the term synonymous with market risk. Market risk is the possibility of investors losing money due to a decrease in the value of their investment. The most common strategy for investors to manage market risk is by diversifying investment portfolios to avoid tying too many assets in a single business entity. Furthermore, buying at various intervals and investing in less correlated investments, such as real estate, bonds, and other commodities can be another method to avoid market risks.

Inflation Risk

Inflation can affect a business in a number of ways. The cost of inputs can suddenly rise, whereas a business engaged in export of goods can find the real value of the currency decline, leading to a loss in selling goods at a previously agreed rate. Similarly, an increase in the price of imports due to a shift in exchange rate can adversely affect the price the business can charge for its products in the local market.

There are a number of ways businesses can manage inflation-related risks, such as by localization of production parts to avoid exchange rate volatility and owing ancillary firms. Likewise, an investor might choose to invest in assets that can offer a real rate of return above inflation. This might include real estate, mineral resources, or government-issued bonds.

Liquidity Risk

You might come across a house that you intend to buy to sell later on. The location of the house might be in an area that has good market value and is likely to increase in the near future. However, how long might it take you to sell the house? Is the property too expensive for an average buyer? Will your assets get tied up for too long after purchasing the property? This is an example of how a liquidity risk can occur. Businesses can end up with assets that are tied up for too long, leading to the risk of owning assets that can be hard to cash out.

A liquidity risk can be avoided by avoiding the purchase of assets that might be difficult to cash out. Some businesses might avoid giving products on credit to local retailers or selling raw material at deferred payments to avoid a liquidity risk.

Longevity Risk

As people receive better healthcare and lifestyles, it is expected that they might live longer. While this is good news, the increase in the lifespan of such individuals means that pensions and policyholders will live longer, leading to a higher payout ratio. Longevity risk is viewed differently by different individuals. For a business, a long lifespan of policyholders or pensioners will lead to an increase in the amount of money they need to pay. Whereas people receiving such benefits will be able to live longer with the assurance of the benefits they have worked hard for.

Many organizations, be it profitable businesses or government-run organizations operating on a loss for several years, have different coping mechanisms for such a risk. Many organizations now hire employees on a contractual basis, whereas pensioners in some cases might be paid out an amount after a ‘plan termination’ by the employer. Some countries might also look to encourage people to work longer and delay social security to rationalize pension plans.

Opportunity Risk

Let’s assume you have a large sum of money placed safely in a safe at home. While the money might appear secure, it might lose value over time due to inflation. You might also run the risk of missing out on a profitable opportunity because you failed to invest in the venture. Businesses can be risk-averse , leading to a competitor taking more of the market share by investing in R&D to improve their product.

An opportunity risk, therefore, requires careful consideration. Businesses might choose to keep a sum for cost overruns, emergency needs or to avoid losing money tied up in assets hard to liquidate while investing the rest to avoid an opportunity risk.

For any business, taxes, especially an increase in them, can lead to a reduction in profitability and loss of sales due to higher prices for their commodities. There’s also the issue of sales tax compliance as the company expands to new states or countries. For an investor, it is essential to determine which portfolio to invest in, considering the rate of tax applicable in relation to the anticipated rate of return. Some investors might opt for tax-deferred accounts to cope with tax risks, whereas businesses might try to reduce tac risks by investing in offers by the government in products which are less heavily taxed.

Many countries are offering fewer taxes on electric cars to help improve the air quality of cities and reduce the negative implications of cars running on petroleum-based products. Some countries have even announced a ban on petrol and diesel-based vehicles by 2035 .

Sequence of Returns Risk

An investor might invest in a portfolio or venture that gives it a return of 5% one year and a loss of 5% the following year. To avoid negative portfolio returns, investors might spend conservatively and account for spending flexibility. An investor might also avoid selling stocks on a loss and use a reserve to fund for a buffer stock to avoid short-term losses due to a sale of stocks at a loss when the chips are down. To have smart investment strategies,  start using an all-in-one investment app , which allows you to prevent risks.

Using Different Techniques for Identifying and Presenting Risks

There are a number of techniques that businesses use to identify risks. If you need to create a PowerPoint presentation about risk management, you can use a number of handy templates and techniques listed below.

Risk Matrix

A risk matrix is used during the process of assessing risks to categorize them and determine the possibility of the occurrence of the risks. The matrix can be a very handy mechanism for visually identifying high-priority risks for important management decisions.

RAIDAR Model

RAIDAR model is a risk management model used to assess risks, assumptions, issues, dependencies, action, and repairs. The model can be useful for assessing project risks and for their effective management.

PEST or PESTEL Analysis

A PEST analysis looks at the political-economic, social and technological environment for macro-environmental factors. The analysis is often extended to also include environmental and legal factors, extending the term PEST to PESTEL. This strategic management component is used for the scanning for the aforementioned factors to determine the potential for market growth, decline, and the direction that the business needs to take.

SWOT Analysis

A SWOT Analysis is a famous strategic planning technique used for identifying strengths, weaknesses, opportunities, and threats. Be it a competitor, economic uncertainty, natural disasters, market volatility, or the potential of an opportunity risk, a SWOT analysis can be a handy tool to use in identifying and mitigating risks.

Decision Tree

A decision tree is used to support decisions by placing options and anticipating possible consequences in a tree-like structure. A decision tree can be used by businesses to assess chance events, resource costs, risks, and payoffs.

Final Words

There are risks that a business can account for and manage and risks that remain perpetual. Risks that might be associated with the national economy, a natural disaster, or sudden change in government policy can be hard to account for and need constant monitoring. This is different from risks that can be managed by changing a hazardous production process to a safer alternative or diversification of portfolio to avoid losses.

Risk management is a practice that businesses would ideally do away with if it were ever possible. As distasteful as it might be, it is impossible to avoid anticipating risks for business continuity and managing them, even if it comes with a burden of heavy costs that are sometimes unavoidable.

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Risk Management PowerPoint Templates For Presentations:

The Risk Management PowerPoint templates go beyond traditional static slides to make your professional presentations stand out. Given the sleek design and customized features, they can be used as PowerPoint as well as  Google Slides templates . Inculcated with visually appealing unique and creative designs, the templates will double your presentation value in front of your audience. You can browse through a vast library of Risk Management Google Slides templates,  PowerPoint themes  and  backgrounds  to stand out in your next presentation.

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What is a risk management powerpoint template.

A Risk Management PowerPoint template is a ready-made presentation template that provides a structured framework for creating professional Risk Management presentations. The Risk Management PPT presentation template includes design elements, layouts, and fonts that you can customize to fit your content and brand.

How To Choose The Best Risk Management Presentation Templates?

Keep the following points in mind while choosing a Risk Management Presentation template for PowerPoint (PPT) or Google Slides:

• Understand your presentation goals and objectives.
• Make sure the Risk Management template aligns with your visual needs and appeal.
• Ensure the template is versatile enough to adapt to various types of content.
• Ensure the template is easily customizable.

Are Risk Management PowerPoint Templates Compatible With Google Slides?

Yes, all our Risk Management presentation templates are compatible and can be used as Risk Management Google Slides templates.

What Are The Advantages Of Risk Management Presentation Templates?

Risk Management PPT presentation templates can be beneficial because they:

• Add multiple visual and aesthetic layers to your slides.
• Ensure that complex information, insights and data is presented in a simplistic way.
• Enhance the overall visual appeal of the content.
• Save you a lot of time as you don’t have to start editing from scratch.
• Improve the professional outlook of your presentation.

Can I Edit The Elements In Risk Management PowerPoint Templates?

Yes, our Risk Management PowerPoint and Google Slides templates are fully editable. You can easily modify the individual elements including icons, fonts, colors, etc. while making your presentations using  professional PowerPoint templates .

How To Download Risk Management PowerPoint Templates For Presentations?

To download Risk Management presentation templates, you can follow these steps:

• Select the resolution (16*9 or 4*3).
• Select the format you want to download the Risk Management template in (Google Slides or PowerPoint).
• Make the payment (SlideUpLift has a collection of paid as well as free Risk Management PowerPoint templates).
• You can download the file or open it in Google Slides.

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Enterprise Risk Management PowerPoint Presentation

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Navigate the complexities of risk management and safeguard your enterprise with our “Enterprise Risk Management PowerPoint Presentation” template. This comprehensive and visually engaging template is designed to help organizations identify, assess, and mitigate risks effectively.

Featuring professionally crafted slides and an intuitive layout, this template covers all aspects of enterprise risk management (ERM), including risk identification, risk assessment, risk treatment, and risk monitoring. Whether you’re presenting to executives, board members, or department heads, this template provides a structured framework to communicate the importance of risk management and the strategies for mitigating potential threats.

With fully customizable slides compatible with PowerPoint and Google Slides, you can tailor the presentation to your organization’s specific risk management processes, industry regulations, and strategic objectives. Add your company logo, adjust colors and fonts, and incorporate relevant data and examples to create a presentation that resonates with your audience and drives action.

Empower your organization with a proactive approach to risk management using our “Enterprise Risk Management PowerPoint Presentation” template. Enhance risk awareness, foster a culture of accountability, and strengthen resilience in the face of uncertainty with this versatile tool.

Key Features:

• Professionally crafted slides covering all aspects of enterprise risk management.
• Intuitive layout to guide your audience through risk identification, assessment, treatment, and monitoring.
• Fully customizable slides compatible with PowerPoint and Google Slides for seamless integration into your presentation.
• Dynamic design elements and multimedia compatibility to enhance engagement and understanding.

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This template is the solution you need to have every potential risk under control. Its slides are a canvas ready to hold your ideas on risk management and its design is the icing on the cake: modern, abstract forms with purple gradients that will captivate your audience’s mind. In addition, we have prepared a series of resources that will represent business data in a way you’ve never seen before. Download the template at your own risk!

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Risk Management

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Risk is unavoidable, but this doesn't mean that risk can't be planned for. To make better-calculated strategic choices, set clear expectations and always be prepared for different outcomes, use our Risk Management presentation. This presentation allows you to roll with the punches at all times and outline ways to monitor and control unpredictable events.

Slide highlights

Go over your risk assessment with this slide. List the hazards, and explain why and how they may affect your venture, propose precautions, introduce risk management strategy and obtain feedback to make necessary changes.

One of the risk assessment tools to consider is the risk assessment matrix . Identify risks, calculate consequences, determine risk rating, create an action plan, then plug data into your risk assessment matrix.

Introduce your risk mitigation plan to your audience with this slide. A risk mitigation plan helps to eliminate or minimize the impact of the hazards events and develop options and actions to enhance opportunities and reduce threats.

According to Risk Management , there are three categories of risk:

• Preventable risksn – these are internal risks, arising from within the organization, that are controllable and ought to be eliminated or avoided. Examples of preventable risks include the risks from employees' and managers' unauthorized, illegal, unethical, incorrect or inappropriate actions and the risks from breakdowns in routine operational processes.
• Strategy risks – companies voluntarily accept some risk in order to generate superior returns from their strategies. "A bank assumes credit risk, for example, when it lends money; many companies take on risks through their research and development activities," the experts say.
• External risks – some risks arise from events outside the company and are beyond its influence or control, such as natural and political disasters and major macroeconomic changes. External risks require unique approach. Because companies cannot prevent such events from occurring, their management must focus on identification and mitigation of their impact.

Application

To develop a risk management strategy, use this six-step process, recommended by business solution platform, EDC:

• Identify the risk – identify risks with regular brainstorming sessions that involve staff from all departments. The experts say it's crucial to look at current risks and have the vision to identify future risks.
• Analyze the risk – conduct an in-depth risk analysis. It can be difficult if you don't have all the information, but the checklist can best prepare you to identify those risks and how they can potentially impact your business in both operational and financial terms.
• Prioritize the risk – a large list of risks can be overwhelming, so it's critical to prioritize the risks so you can address the most pressing of them first. Once you have the checklist, go one step further and classify risks as high, medium or low.
• Assign responsibility to the risk – ensure there is someone in the organization that's going to own and oversee the risk management. "Determining who will be responsible is an internal company decision; it could be someone who works in a specific risk area who is best suited to tackle the risk or an arbitrary choice. It's a best practice to develop a risk management team consisting of both internal and, if applicable, external people in your supply chain," the experts say.
• Respond to the risk – develop a strong risk management plan that covers: risk management team, market information and market entry information, contracts and getting paid, quality and performance systems and processes, insurance and cash flow protection.
• Monitor the risk – things will change in your company and so will the risks. "As these changes occur, it's critical to update your plan to ensure that you don't become complacent or lose sight of potential threats to your business. Incorporating an ongoing review of your risk management plan into the company's planning activities will ensure you are on top of any potential risks," the EDC team says.

When COVID-19 crept up on the world, companies like Apple ended up being "especially vulnerable because of their large customer base in China and the dependence of their supply chain on Chinese manufacturers," Amiyatosh Purnanandam, professor of finance at the Ross School of Business, University of Michigan, writes in his article for Forbes .

Tim Cook named the impact of coronavirus as a significant source of uncertainty in the company during Q1 2020 earnings call. At the time, Apple had restricted employee travel and shut one store in China due to the virus outbreak, and was cutting back on retail store hours in China as well.

Purnanandam meditates on the question of what can the managers do to control risks that are not even identifiable? "Unlike exchange rates or commodity prices, there are no market-based derivatives contracts that can be used to hedge such a threat," Purnanandam writes. He's answer is cash balance. Cash balance is the best vaccine against unpredictable events such as the pandemic, Purnanandam writes. Moreover, he believes that cash is actually the best hedge against any risk that cannot be identified or quantified ahead of time. So in case of Apple, a $200 billion pile of cash is what makes it resistant to the risk.

Risk Management 101

May 03, 2013

630 likes | 1.43k Views

Risk Management 101. An Introductory Guide to Risk Management and Managing Risks. Definition of Risk. danger possibility peril chance exposure jeopardy consequence hazard menace threat gamble

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Presentation Transcript

Risk Management 101 An Introductory Guide to Risk Management and Managing Risks

Definition of Risk danger possibility peril chance exposure jeopardy consequence hazard menace threatgamble We are concerned with the potential loss, including economic loss, human suffering, or that which may prevent the organization from being able to achieve its goals.

WHAT IS RISK MANAGEMENT? • A conscious effort of planning,organizing, directing, and controlling resources and activities. • To minimize the adverse effects of accidental loss at the LEAST POSSIBLE ACCEPTABLE COST.

Risk Management Decision Process Monitor results/ Modify methods Identify exposures Implement selected method Evaluate loss potential Select method

Types of Risk and Loss • General Liability • Workers’ Compensation • Property Loss – building & contents • Athletic Injury • Business Interruption • Institutional Reputation and Image Loss • Contractual Activities • Vehicle

Types of Risk and Loss continued • Financial Risk • Legal Liability • Environmental Health & Safety • Information Management • Intellectual Property • Student Activities • Auxiliary Enterprises

California State University Risk Management Authority CSURMA • Joint powers authority (JPA) formed under CA Gov’t Code section 6500 et seq.; ultimately allows CSURMA to provide insurance programs, self-insurance programs, and related services to the 23 campuses, Chancellor’s Office, and auxiliaries. • Separate legal entity from the CSU. • Subject to open meetings (Bagley-Keene Meeting Act).

Programs in the CSURMA • General Liability Program • Workers’ Compensation Program • Master Property Program • IDL/NDI/UI Program • Athletic Injury Medical Expense Program (AIME)

Programs in the CSURMA continued • Property – Inland Marine Program • AGPIP – Auxiliary Group Purchase Insurance Program – create market clout among the CSU Auxiliary Organizations to drive premium costs down through group purchase of insurance. • Student Health Insurance Program (CSUSHI) • Foreign Travel Liability Program

Campus Risk Exposures • On the Job Safety (internal & external) • EPL • Vehicle Accidents • Vendors (contracts & product) • Building Maintenance (repairs, IAQ, general maintenance, etc.) • Facilities Use (internal & external) • Reputation (internal & external)

Headlines: Eight killed in Utah State University Van Rollover By Paul Foy ASSOCIATED PRESS 10:09 p.m. September 26, 2005 TREMONTON, Utah – A Utah State University van returning to campus from a field trip blew a tire on Interstate 84 and rolled over, killing seven agriculture students and an instructor. Three other students were hospitalized. The van overturned Monday on the freeway near Tremonton, about 65 miles northwest of Salt Lake City. All 11 occupants were thrown from the van. The students were underclassmen, mostly freshmen. "Some have only been on campus a couple of weeks," university President Stan Albrecht said, calling the deaths an "incredible tragedy." No one in the 16-passenger van, driven by the instructor, was wearing a seatbelt, the Utah Highway Patrol said. Six men were pronounced dead at the scene. Two others died at hospitals. Two of the survivors were in critical condition at McKay-Dee Hospital in Ogden, hospital supervisor Robert Miller said. A third was taken to Ogden Regional Medical Center. .... The single-vehicle crash occurred at about 4:30 p.m. It appeared the left rear tire on the eastbound van had blown as it tried to pass another vehicle, said patrol Lt. Ed Michaud. The Dodge van rolled four times, coming to rest on its wheels about six feet from a 50-foot-deep ravine, troopers said. The van's roof was collapsed to the windows. Parts of the vehicle and personal belongings littered the area near the freeway. "It was a horrific, nasty accident," said Trooper Jason Jensen. "It was one of those things you don't want to drive up on." Albrecht said the students had been on a field trip to look at harvest equipment near Tremonton, west of the Logan campus. Utah State University has about 21,000 students. .....A similar rollover shocked the school in April 2001. Six members of the men's volleyball club were injured when their Dodge van flipped over near Laramie, Wyoming. The crash prompted a government safety warning for large-sized vans.

What we think…. The usual reality.. Field Trips

Obligations • Know where the students are going. • Prepare them for an emergency. • Know in advance if there are health issues that may have to be dealt with. • Review acceptable actions and unacceptable actions.

Student Travel • Approval = Acknowledged benefit • Prepare the students for the travel – risks, expectations, contacts • Waivers versus Informed Consents • Know who is where • Options for those with disabilities

The Accident • Have your contact information handy. • Report the accident to the campus (your supervisor or the Police) as soon as you can. • Do Not Admit Fault. • Do Not make promises.

The Claim • Their’s Victim’s Compensation & Government Claims • Your’s Victim’s Compensation & Government Claims • Our’s CSU Risk Management – Program Administrators

Government Claim Booklet • State of California Victim’s Compensation & Government Claims Program • Includes Instructions & Claim Form http://www.governmentclaims.ca.gov/

METHODS OF CONTROLLING RISK • Avoidance • Transfer of Risk • Retention of Risk • Reduce Risk through Loss Reduction Efforts • Finance Retained Risk • Define Meaningful Standards and Expectations

EVALUTE LOSS POTENTIAL • Evaluation Techniques • Frequency/Severity of Claims • Publications/Periodicals/Other Universities • Political/Litigation Climate • Anticipate

The Challenges We Face • Internal • “We’ve never had that kind of loss” • “What, change my procedure, I’ve always done it this way!” • “I’ve taught this class for 20 years without a problem!” • “All Risk Management has is: bad news with higher price tags!” • No communication!

The Challenges We All Face • External: • The Insurance Market • Your vendors • Your constituents • Unions • Auxiliary Organizations • Foundations • Athletic Corporations • Bookstores • Food Services • Health Centers

OTHER RISKS TO CAUSE YOU WORRY • Liability • General, a wide variety of exposures, including civil liability arising out of accidents resulting from the premises or operations of a public university • Employment- the trifecta of risk • Expensive to defend • Awarding of compensatory, special damages • Awarding of plaintiff’s attorney fees • Automobile • Public Officials’ Errors and Omissions

Risk Management’s Role • Manages insurance and claims • Looks for process improvement through feedback • Consults • Reviews • Forecasts • Play “what ifs” • Thinks worst case scenarios • Recommends

Let’s Team Up! RM&S Takes an Active Role: • G.O. • Observe • Inquire • Alert • Collaborate

Most Risks Do Have a Reward! Be prepared in order to enjoy.

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Risk Management. Mrs. Smith 2/10/2014. Recession. A Period of temporary economic decline. Trade and Industrial activity are reduced During recessions jobs are scarce and companies are doing everything they can to protect their reputations. Inflation Warranty Guarantee. What is Risk?.

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Risk Management. Introduction Risk identification Risk projection (estimation) Risk mitigation, monitoring, and management. (Source: Pressman, R. Software Engineering: A Practitioner’s Approach . McGraw-Hill, 2005). Introduction. Definition of Risk.

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Risk management theory and practice

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Value and resilience through better risk management

Today’s corporate leaders navigate a complex environment that is changing at an ever-accelerating pace. Digital technology underlies much of the change. Business models are being transformed by new waves of automation, based on robotics and artificial intelligence. Producers and consumers are making faster decisions, with preferences shifting under the influence of social media and trending news. New types of digital companies are exploiting the changes, disrupting traditional market leaders and business models. And as companies digitize more parts of their organization, the danger of cyberattacks and breaches of all kinds grows.

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Beyond cyberspace, the risk environment is equally challenging. Regulation enjoys broad popular support in many sectors and regions; where it is tightening, it is putting stresses on profitability. Climate change is affecting operations and consumers and regulators are also making demands for better business conduct in relation to the natural environment. Geopolitical uncertainties alter business conditions and challenge the footprints of multinationals. Corporate reputations are vulnerable to single events, as risks once thought to have a limited probability of occurrence are actually materializing.

The role of the board and senior executives

Risk management at nonfinancial companies has not kept pace with this evolution. For many nonfinancial corporates, risk management remains an underdeveloped and siloed capability in the organization, receiving limited attention from the most senior leaders. From over 1,100 respondents to McKinsey’s Global Board Survey for 2017 , we discovered that risk management remains a relatively low-priority topic at board meetings (exhibit).

A long way to go

Boards spend only 9 percent of their time on risk—slightly less than they did in 2015. Other questions in the survey revealed that only 6 percent of respondents believe that they are effective in managing risk (again, less than in 2015). Some individual risk areas are relatively neglected, and even cybersecurity, a core risk area with increasing importance, is addressed by only 36 percent of boards. While many senior executives stay focused on strategy and performance management, they often fail to challenge capabilities or strategic decisions from a risk perspective (see sidebar, “A long way to go”). A reactive approach to risks remains too common, with action taken only after things go wrong. The result is that boards and senior executives needlessly put their companies at risk, while personally taking on higher legal and reputational liabilities.

Boards have a critical role to play in developing risk-management capabilities at the companies they oversee. First, boards need to ensure that a robust risk-management operating model is in place. Such a model allows companies to understand and prioritize risks, set their risk appetite, and measure their performance against these risks. The model should enable the board and senior executives to work with businesses to eliminate exposures outside the company’s appetite statement, reducing the risk profile where warranted, through such means as quality controls and other operational processes. On strategic opportunities and risk trade-offs, boards should foster explicit discussions and decision making among top management and the businesses. This will enable the efficient deployment of scarce risk resources and the active, coordinated management of risks across the organization. Companies will then be prepared to address and manage emerging crises when risks do materialize.

A sectoral view of risks

Most companies operate in a complex, industry-specific risk environment. They must navigate macroeconomic and geopolitical uncertainties and face risks arising in the areas of strategy, finance, products, operations, and compliance and conduct. In some sectors, companies have developed advanced approaches to managing risks that are specific to their business models. These approaches can sustain significant value. At the same time companies are challenged by emerging types of risks for which they need to develop effective mitigation plans; in their absence, the losses from serious risk events can be crippling.

• Automotive companies are controlling supply-chain risks with sophisticated monitoring models that allow OEMs to identify potential risks upfront across the supply chain. At the same time, auto companies must address the strategic challenge of shifting toward electric-powered and autonomous vehicles.
• Pharma companies seek to manage the downside risk of large investments in their product portfolio and pipeline, while addressing product quality and patient safety to comply with relevant regulatory requirements.
• Oil and gas, steel, and energy companies apply advanced approaches to manage the negative effects of financial markets and commodity-price volatility. As social and political demands for cleaner energy are increasing, these companies are actively pursuing growth opportunities to shift their portfolios in anticipation of an energy transition and a low-carbon future.
• Consumer-goods companies protect their reputation and brand value through sound practices to manage product quality as well as labor conditions in their production facilities. Yet they are constantly challenged to meet consumers’ ever-changing tastes and needs, as well as consumer-protection regulations.

Toward proactive risk management

An approach based on adherence to minimum regulatory standards and avoidance of financial loss creates risk in itself. In a passive stance, companies cannot shape an optimal risk profile according to their business models nor adequately manage a fast-moving crisis. Eschewing a risk approach comprised of short-term performance initiatives focused on revenue and costs, top performers deem risk management as a strategic asset, which can sustain significant value over the long term. Inherent in the proactive approach are several essential components.

Strategic decision making

More rigorous, debiased strategic decision making can enhance the longer-term resilience of a company’s business model, particularly in volatile markets or externally challenged industries. Research shows that the active, regular reevaluation of resource allocation, based on sound assessments of risk and return trade-offs (such as entering markets where the business model is superior to the competition), creates more value and better shareholder returns. 1 See, for example, Yuval Atsmon, “ How nimble resource allocation can double your company’s value ,” August 2016; William N. Thorndike, Jr., The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success , Boston, MA: Harvard Business Review Press, 2012; Rebecca Darr and Tim Koller, “ How to build an alliance against corporate short-termism ,” January 2017. Flexibility is empowering in a dynamic marketplace. Many companies use hedging strategies to insure against market uncertainties. Airlines, for example, have been known to hedge future exposures to fuel-price fluctuations, a move that can help maintain profitability when prices climb. Likewise, strategic investing, based on a longer-term perspective and a deep understanding of a company’s core proposition, generates more value than opportunistic moves aiming at a short-term bump in the share price.

Debiasing and stress-testing

Approaches that include debiasing and stress-testing help senior executives consider previously overlooked sources of uncertainty to judge whether the company’s risk-bearing capacity can absorb their potential impact. A utility in Germany, for example, improved decision making by taking action to mitigate behavioral biases. As a result, it separated its renewables business from its conventional power-generation operations. In the aftermath of the Fukushima disaster, which sharply raised interest in environmentally friendly power generation, the utility’s move led to a significant positive effect on its share price (15 percent above the industry index).

Higher-quality products and safety standards

Investments in product quality and safety standards can bring significant returns. One form this takes in the energy sector is reduced damage and maintenance costs. At one international energy company, improved safety standards led to a 30 percent reduction in the frequency of hazardous incidents. Auto companies with reputations built on safety can command higher prices for their vehicles, while the better reputation created by higher quality standards in pharma creates obvious advantages. As well as the boost in demand that comes from a reputation for quality, companies can significantly reduce their remediation costs—McKinsey research suggests that pharma companies suffering from quality issues lose annual revenue equal to 4 to 5 percent of cost of goods sold.

Comprehensive operative controls

These can lead to more efficient and effective processes that are less prone to disruption when risks materialize. In the auto sector, companies can ensure stable production and sales by mitigating the risk of supply-chain disruption. Following the 2011 earthquake and tsunami, a leading automaker probed potential supply bottlenecks and took appropriate action. After an earthquake in 2016, the company quickly redirected production of affected parts to other locations, avoiding costly disruptions. In high-tech, companies applying superior supply-chain risk management can achieve lasting cost savings and higher margins. One global computer company addressed these risks with a dedicated program that saved $500 million during its first six years. The program used risk-informed contracts, enabling suppliers to lower the costs and risks of doing business with the company. The measures achieved supply assurance for key components, particularly during market shortages, improved cost predictability for components that have volatile costs, and optimized inventory levels internally and at suppliers.

Stronger ethical and societal standards

To achieve standing among customers, employees, business partners, and the public, companies can apply ethical controls on corporate practices end to end. If appropriately publicized and linked to corporate social responsibility, a program of better ethical standards can achieve significant returns in the form of heightened reputation and brand recognition. Customers, for example, are increasingly willing to pay a premium for products of companies that adhere to tighter standards. Employees too appreciate being associated with more ethical companies, offering a better working environment and contributing to society.

The three dimensions of effective risk management

Ideally, risk management and compliance are addressed as strategic priorities by corporate leadership and day-to-day management. More often the reality is that these areas are delegated to a few people at the corporate center working in isolation from the rest of the business. By contrast, revenue growth or cost savings are deeply embedded in corporate culture, linked explicitly to profit-and-loss (P&L) performance at the company level. Somewhere in the middle are specific control capabilities regarding, for example, product safety, secure IT development and deployment, or financial auditing.

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To change this picture, leadership must commit to building robust, effective risk management. The project is three-dimensional: 1) the risk operating model, consisting of the main risk management processes; 2) a governance and accountability structure around these processes, leading from the business up to the board level; and 3) best-practice crisis preparedness, including a well-articulated response playbook if the worst case materializes.

1. Developing an effective risk operating model

The operating model consists of two layers, an enterprise risk management (ERM) framework and individual frameworks for each type of risk. The ERM framework is used to identify risks across the organization, define the overall risk appetite, and implement the appropriate controls to ensure that the risk appetite is respected. Finally, the overarching framework puts in place a system of timely reporting and corresponding actions on risk to the board and senior management. The risk-specific frameworks address all risks that are being managed. These can be grouped in categories, such as financial, nonfinancial, and strategic. Financial risks, such as liquidity, market, and credit risks, are managed by adhering to appropriate limit structures; nonfinancial risks, by implementing adequate process controls; strategic risks, by challenging key decisions with formalized approaches such as debiasing, scenario analyses, and stress testing. While financial and strategic risks are typically managed according to the risk-return trade-off, for nonfinancial risks, the potential downside is often the key consideration.

Finding the right level of risk appetite

Companies need to find the right level of risk appetite, which helps ensure long-term resilience and performance. Risk appetite that is too relaxed or too restrictive can have severe consequences on company financials, as the following two examples indicate:

Too relaxed. One nuclear energy company set its standards for steel equipment in the 1980s and did not review them even when the regulations changed. When the new higher standards were applied to the manufacture of equipment for nuclear power plants, the company fell short of compliance. An earlier adaptation of its risk appetite and tolerance levels would have been significantly less costly.

Too restrictive. A pharma company set quality tolerances to produce a drug to a significantly stricter level than what was required by regulation. At the beginning of production, tolerance intervals could be fulfilled, but over time, quality could no longer be assured at the initial level. The company was unable to lower standards, as these had been communicated to the regulators. Ultimately, production processes had to be upgraded at a significant cost to maintain the original tolerances.

As well as assessing risk based on likelihood and impact, companies must also assess their ability to respond to emerging risks. Capabilities and capacities needed to manage these risks should be evaluated and gaps filled accordingly. Of particular importance in crisis management is the timeliness of an effective response when things go awry. The highly likely, high-impact risk events on which risk management focuses most of its attention often emerge with disarming velocity, taking many companies unawares. To be effective, the enterprise risk management framework must ensure that the two layers are seamlessly integrated. It does this by providing clarity on risk definitions and appetite as well as controls and reporting.

• Taxonomy. A company-wide risk taxonomy should clearly and comprehensively define risks; the taxonomy should be strictly respected in the definition of risk appetite, in the development of risk policy and strategy, and in risk reporting. Taxonomies are usually industry-specific, covering strategic, regulatory, and product risks relevant to the industry. They are also determined by company characteristics, including the business model and geographical footprint (to incorporate specific country and legal risks). Proven risk-assessment tools need to be adopted and enhanced continuously with new techniques, so that newer risks (such as cyberrisk) are addressed as well as more familiar risks.
• Risk appetite. A clear definition of risk appetite will translate risk-return trade-offs into explicit thresholds and limits for financial and strategic risks, such as economic capital, cash-flow at risk, or stressed metrics. In the case of nonfinancial risks like operational and compliance risks, the risk appetite will be based on overall loss limits, categorized into inherent and residual risks (see sidebar, “Finding the right level of risk appetite”).
• Risk control processes. Effective risk control processes ensure that risk thresholds for the specified risk appetite are upheld at all levels of the organization. Leading companies are increasingly building their control processes around big data and advanced analytics. These powerful new capabilities can greatly increase the effectiveness and efficiency of risk monitoring processes. Machine-learning tools, for example, can be very effective in monitoring fraud and prioritizing investigations; automated natural language processing within complaints management can be used to monitor conduct risk.
• Risk reporting. Decision making should be informed with risk reporting. Companies can regularly provide boards and senior executives with insights on risk, identifying the most relevant strategic risks. The objective is to ensure that an independent risk view, encompassing all levels of the organization, is embedded into the planning process. In this way, the risk profile can be upheld in the management of business initiatives and decisions affecting the quality of processes and products. Techniques like debiasing and the use of scenarios can help overcome biases toward fulfilment of short-term goals. A North American oil producer developed a strategic hypothesis given uncertainties in global and regional oil markets. The company used risk modelling to test assumptions about cash flow under different scenarios and embedded these analyses into the reports reviewed by senior management and the board. Weak points in the strategy were thereby identified and mitigating actions taken.

2. Toward robust risk governance, organization, and culture

The risk operating model must be managed through an effective governance structure and organization with clear accountabilities. The governance model maintains a risk culture that strongly reinforces better risk and compliance management across the three lines of defense—business and operations, the compliance and risk functions, and audit. The approach recognizes the inherent contradiction in the first line between performance (revenue and costs) and risk (losses). The role of the second line is to review and challenge the first line on the effectiveness of its risk processes and controls, while the third line, audit, ensures that the lines one and two are functioning as intended.

• Three lines of defense. Effective implementation of the three lines involves the sharp definition of lines one and two at all levels, from the group level through the lines of business, to the regional and legal entity levels. Accountabilities regarding risk and control management must be clear. Risk governance may differ by risk type: financial risks are usually managed centrally, while operational risks are deeply embedded into company processes. The operational risk of any line of business is managed by the business owning the product-development, production, and sales processes. This usually translates into forms of quality control, but the business must also balance the broader impact of risk and P&L. In the development of new diesel engines, automakers lost sight of the balance between compliance risk and the additional cost to meet emission standards, with disastrous results. Risk or compliance functions can only complement these activities by independently reviewing the adequacy of operational risk management, such as through technical standards and controls.
• Reviewing the risk appetite and risk profile. Of central importance within the governance structure are the committees that define the risk appetite, including the parameters for doing business. These committees also make specific decisions on top risks and review the control environment for enhancements as the company’s risk profile changes. Good governance in this case means that risk decisions are considered within the existing divisional, regional, and senior-management governance structure of a company, supported by risk, compliance, and audit committees.
• Integrated risk and compliance governance setup. A robust and adequately staffed risk and compliance organization supports all risk processes. The integrated risk and compliance organization provides for single ownership of the group-wide ERM framework and standards, appropriate clustering of second-line functions, a clear matrix between divisions and control functions, and centralized or local control as needed. A clear trend is observable whereby the ERM layer responsible for group-wide standards, risk processes, and reporting becomes consolidated, whereas the expert teams setting and monitoring specific control standards for the business (including standards for commercial, technical compliance, IT or cyberrisks) become specialized teams covering both regulatory compliance as well as risk aspects.
• Resources. Appropriate resources are a critical factor in successful risk governance. The size of the compliance, risk, audit, and legal functions of nonfinancial companies (0.5 for every 100 employees, on average), are usually much smaller than those of banks (6.9 for every 100 employees). The disparity is partly a natural outcome of financial regulation, but some part of it reflects a capability gap in nonfinancial corporates. These companies usually devote most of their risk and control resources in sector-specific areas, such as health and safety for airlines and nuclear power companies or quality assurance for pharmaceutical companies. The same companies can, however, neglect to provide sufficient resources to monitor highly significant risks, such as cyberrisk or large investments.
• Risk culture. An enhanced risk culture covers mind-sets and behaviors across the organization. A shared understanding is fostered of key risks and risk management, with leaders acting as role models. Especially important are capability-building programs on risk as well as formal mechanisms to assess and reinforce sound risk management practices.

An enhanced risk culture covers mind-sets and behaviors across the organization. A shared understanding is fostered of key risks and risk management, with leaders acting as role models.

3. Crisis preparedness and response

A high-performing, effective risk operating model and governance structure, with a well-developed risk culture minimize the probability of corporate crises , without, of course, completely eliminating them. When unexpected crises strike at high velocity, multinational companies can lose billions in value in the first days and soon find themselves struggling to keep their market position. A best-in-class risk management environment provides the ideal conditions for preparation and response.

• Ensure board leadership. The most important action companies can take to prepare for crises is to ensure that the effort is led by the board and senior management. Top leadership must define the main expected threats, the worst-case scenarios, and the actions and communications that will be accordingly rolled out. For each threat, hypothetical scenarios should be developed for how a crisis will unfold, based on previous crises within and beyond the company’s industry and region.
• Strengthen resilience. By mapping patterns that arose in previous crises, companies can test their own resilience, challenging key areas across the organization for potential weaknesses. Targeted countermeasures can then be developed in advance to strengthen resilience. This crucial aspect of crisis preparedness can involve reviewing and revising the terms and conditions for key suppliers, shoring up financials to ensure short-term availability of cash, or investing in advanced cybersecurity measures to protect essential data and software in the event of failures and breaches.
• Develop action plans and communications. Once these assessments are complete and resilience-building countermeasures are in place, the company can then develop action plans for each threat. The plans must be well articulated, founded on past crises, and address operational and technical planning, financial planning, third-party management, and legal planning. Care should be taken to develop an optimally responsive communications strategy as well. The correct strategy will enable frontline responders to keep pace with or stay ahead of unfolding crises. Communications failures can turn manageable crises into irredeemable catastrophes. Companies need to have appropriate scripts and process logic in place detailing the response to crisis situations, communicated to all levels of the organization and well anchored there. Airlines provide an example of the well-articulated response, in their preparedness for an accident or crash. Not only are detailed scripts in place, but regular simulations are held to train employees at all levels of the company.
• Train managers at all levels. The company should train key managers at multiple levels on what to expect and enable them to feel the pressures and emotions in a simulated environment. Doing this repeatedly and in a richer way each time will significantly improve the company’s response capabilities in a real crisis situation, even though the crisis may not be precisely the one for which managers have been trained. They will also be valuable learning exercises in their own right.
• Put in place a detailed crisis-response playbook. While each crisis can unfold in unique and unpredictable ways, companies can follow a few fundamental principles of crisis response in all situations. First, establish control immediately after the crisis hits, by closely determining the level of exposure to the threat and identifying a crisis-response leader, not necessarily the CEO, who will direct appropriate actions accordingly. Second, involved parties—such as customers, employees, shareholders, suppliers, government agencies, the media, and the wider public—must be effectively engaged with a dynamic communications strategy. Third, an operational and technical “war room” should be set up, to stabilize primary threats and determine which activities to sustain and which to suspend (identifying and reaching out to critical suppliers). Finally, a deliberate effort must be made to address and neutralize the root cause of the crisis and so bring it to an end as soon as possible.

In a digitized, networked world, with globalized supply chains and complex financial interdependencies, the risk environment has grown more perilous and costly. A holistic approach to risk management, based on the lessons, good and bad, of leading companies and financial institutions, can derive value from that environment. The path to risk resilience that is emerging is an effort, led by the board and senior management, to establish the right risk profile and appetite. Success depends on the support of a thriving risk culture and state-of-the-art crisis preparedness and response. Far from minimal regulatory adherence and loss avoidance, the optimal approach to risk management consists of fundamentally strategic capabilities, deeply embedded across the organization.

Daniela Gius is a senior expert in McKinsey’s Hamburg office, Jean-Christophe Mieszala is a senior partner in the Paris office, Ernestos Panayiotou is a partner in the Athens office, and Thomas Poppensieker is a senior partner in the Munich office.

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Risk Management Presentation Slides - Risk Alert Board

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Download the best Risk Management Presentation Slides to present the risk identification, risk measurement, and validation report to your audience. It will show the slide you will be presenting and display the risk alert you will be using. You can use this slide to educate your attendees on the different risks that can affect your company. You can also show the risk management that a person can take to protect their company. This template  can be modified and altered as you required suiting your organization's needs.

Some risks which can affect the company are listed in this Risk Management PPT template  with Risk Alert Board. This multi-colored board displays the various levels of risk from low to extreme. It helps to identify the risk, measure the risk, and validate the report. In any company of any size, this risk management slide can explain the risk to your audience in such a manner that they can easily understand. The risk management presentation slide can describe the governance, risk, and compliance , the risk level, and the consequences of the risk to the organization in the form of a slide presentation that is understandable to the audience. 

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The risk management presentation slides can be a combination of written information, graphics, and video that illustrates how organizations' risk management policies and procedures can help reduce the risk to an acceptable level. These presentations are often used in corporate environments to support senior management and other key team members. The objective of this  Risk PowerPoint Template is to illustrate what has been achieved through the efforts put forth to ensure the company runs a smooth operation. It can show the progress made in reducing costs and dangers, which will instill confidence amongst employees. 

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Regulatory Compliance Risk Management: Frameworks, Best Practices, & How to Do a Risk Assessment

Table of Contents

What is regulatory risk?

Challenges of regulatory compliance risk management, regulatory risk management frameworks, how to conduct a regulatory compliance risk assessment, managing regulatory compliance risk with secureframe.

• May 14, 2024

Emily Bonnie

Senior Content Marketing Manager at Secureframe

Rob Gutierrez

Senior Compliance Manager at Secureframe

Regulatory compliance risk management is all about taking proactive steps to comply with the laws, regulations, and standards that affect your organization. Managing compliance is essential not only for avoiding legal penalties and fines but also for protecting your organization's reputation and enhancing its operational integrity.

Yet understanding and effectively managing compliance risks can be a significant challenge. Organizations have to navigate evolving regulations, manage variations in compliance requirements, and allocate adequate resources to compliance without hindering growth.

This article delves into the essentials of regulatory compliance risk management, explaining its importance, the common challenges organizations face, strategies to overcome these challenges, and a step-by-step guide on conducting a thorough regulatory compliance risk assessment for your business.

What is regulatory risk? Why regulatory compliance matters

Regulatory risk is the potential for new or changing laws and regulations to impact a company's business operations, profitability, or reputation.

Common examples of regulatory risk include:

• Financial regulations: Changes in banking laws, securities regulations, or tax laws can affect how companies manage their finances, report earnings, and conduct transactions.
• Environmental regulations: New or stricter environmental laws may require companies to invest in cleaner technologies or change their operational processes to reduce pollution and waste, impacting their costs and operations.
• Health and safety regulations: Industries such as manufacturing, construction, and healthcare often face updates in safety standards that require new compliance measures, potentially leading to increased operational costs.
• Data protection and privacy laws: With increasing concerns over data security, companies must comply with regulations like the General Data Protection Regulation (GDPR) in Europe, the California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA) , and similar laws mandating how consumer data is handled and protected.
• Employment laws: Changes in labor laws, including minimum wage, working hours, and benefits, can influence staffing and operational costs.

Managing regulatory risk is critical — and complex. Having a strategy in place to proactively anticipate and adapt to changing regulations helps organizations maintain operational stability and prevent disruptions to customers as well as avoid unexpected cost increases and financial strain. 

Fully understanding the regulatory landscape also helps businesses make more informed strategic decisions about entering new markets, expanding into new industries or customer segments, and developing new products or services. 

Regulatory risk vs compliance risk

While regulatory and compliance risk are closely related and often overlap, they are not exactly the same. 

Regulatory risk is about managing new or changing laws and regulations and creating a strategy to help your organization anticipate and adapt. 

Compliance risk involves avoiding the potential losses your organization could face by failing to adhere to current industry standards, internal policies, or best practices. This could include losing potential customers and investors, operational disruptions, or suffering a security breach. 

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Overcoming the challenges of regulatory compliance risk management

The regulatory landscape is constantly shifting, making continuous compliance a major challenge for organizations.

Take data privacy as just one example. Between 2021 and 2023, seventeen new countries enacted data privacy laws, bringing the total to 162 globally — with at least twenty other countries having introduced new bills. And while the main intent behind these data privacy laws may be the same, the content of each regulation can vary significantly, making it extremely challenging for companies to understand their various compliance obligations and adhere to different legal requirements.  

Effective regulatory change management demands a significant amount of time and resources. Let’s explore a few recent statistics that paint a picture of the various challenges facing risk and compliance officers.

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Complex regulatory environments

In 2023, almost 70% of service organizations said they need to demonstrate compliance with at least six different frameworks across information security and data privacy.

Regulations can vary widely depending on the industry, country, or even local jurisdictions. Keeping up with this complexity and ensuring compliance across different regulatory landscapes is challenging, especially for organizations operating in multiple geographies.

To determine compliance obligations, organizations consider industry-specific regulations as well as applicable laws impacting different locations the company operates in or the customers it serves. For particularly complex regulatory environments, some companies work with legal professionals or consultants to complete a regulatory compliance audit and identify all applicable laws and regulations. 

Changing regulations and compliance requirements

Laws and regulations can change frequently. In 2023 alone, the CPRA became enforceable, significantly amending the CCPA — and at least 40 states and Puerto Rico introduced 350 consumer privacy bills . Adapting to changes in the regulatory environment is time and resource intensive.

60% of businesses say they struggle to keep up with compliance and regulatory requirements, and 23% of security and IT professionals said staying aware of and interpreting new requirements and regulations was their top compliance program challenge.

Leveraging technology to monitor and flag new and changing regulatory requirements that affect your organization can give your team valuable time back and ensure nothing gets missed. Compliance software can provide alerts about legislative changes, regulatory announcements, and updates from industry bodies, and also help manage documentation, internal audits, and compliance training to ensure your organization stays compliant with new requirements.

Resource constraints

Adequately managing regulatory risks requires significant investment in terms of time, money, and personnel, and many compliance teams are still relying on costly manual processes. 76% of compliance managers say they manually scan regulatory websites to track changes and assess the impact on their organization.

Companies are challenged with allocating resources effectively to try and balance regulatory requirements with other business priorities. And recent statistics indicate they’re choosing to roll the dice regarding compliance regulations — 21% of organizations plan to do nothing to address framework revisions or updated requirements until a required audit or external party findings.

To avoid potential risks, regulatory compliance must be treated as an ongoing investment — one that fuels growth by building a competitive edge and supporting long-term sustainability.

Balancing resources between regulatory compliance and growth initiatives is crucial for organizations to both mitigate risks and seize opportunities for expansion. By closely aligning compliance activities with business goals, teams can tie their efforts directly to the organization’s overall growth strategies, such as market expansion or customer trust. 

Organizations can also implement tools that improve efficiency and effectiveness for compliance processes, automating routine tasks such as evidence and data collection , continuous monitoring , document management , personnel training , and reporting . This allows staff to focus on more strategic tasks that directly contribute to business growth. 

Stakeholder involvement

35% of risk executives say compliance and regulatory risk presents the greatest threat to their company's ability to drive growth.

Aligning a regulatory compliance risk management program with the overall business strategy is crucial yet challenging. Organizations need to ensure that their approach to managing regulatory risk supports their strategic goals and does not hinder growth or innovation.

While company stakeholders are building business strategies focusing on growth and profitability, compliance objectives prioritize mitigating risk and maintaining operational integrity. In some cases, compliance measures might restrict business activities, or strategic initiatives might bump up against regulatory boundaries. 

For example, consider a global tech company planning to expand its user base into a new geography to increase revenue. This expansion strategy must account for local data protection laws, which are stricter than the laws in the company’s home country. Implementing the necessary compliance measures, such as data localization requirements, would involve substantial changes to the company's data management systems, incur additional operational costs, and extend project timelines, which might not align with the aggressive growth targets set by the company.

As mentioned above, compliance initiatives can also be very resource-intensive, requiring ongoing investments in technology, training, and experienced personnel. While compliance ultimately drives growth in a significant way , it can be perceived as a cost center that diverts resources away from more direct growth initiatives. 

Compliance and growth shouldn’t be seen as competing priorities. To overcome this challenge, senior management must be involved in integrating the regulatory risk management strategy with the organization’s strategic goals. How might regulatory changes impact various aspects of the business? What can be done to ensure compliance efforts promote rather than hinder business objectives?

Third-party compliance issues

Different vendors may have varying levels of compliance standards, depending on their geographic location, industry, and company size. Ensuring that each vendor meets the relevant regulatory requirements can be complex and time-consuming, and organizations may not have the level of visibility they need to assess whether vendors are adhering to requirements. 

As regulations evolve, ensuring that all contractual relationships remain compliant with new laws and standards can also be challenging. Organizations can help mitigate this by including explicit compliance clauses in vendor contracts. These clauses should outline necessary regulatory standards and the consequences for non-compliance, as well as allow for regular compliance audits and assessments.

Implementing compliance management software can also simplify vendor management by storing vendor compliance documentation such as audit reports, completed security questionnaires, and due diligence notes in a single tool. The compliance software can track compliance across all vendors , map vendor compliance to address framework requirements,  and generate alerts for potential non-compliance issues.

Lack of visibility

Regulatory risk management often involves multiple departments including legal, compliance, IT,  finance, and operations. Ensuring these departments work together effectively to address regulatory risks can be a complex organizational challenge.

For example, without clear visibility, different departments might implement and enforce compliance policies inconsistently. A lack of transparency can also hinder the compliance team’s ability to fully understand its regulatory risk profile, resulting in undetected and unaddressed risks that leave the organization open to compliance violations. 

Using a centralized compliance management system can significantly improve visibility into compliance statuses, issues, and priorities, as well as standardize and enforce policies and processes throughout the organization — making critical information more accessible across the company. Dashboards and analytics tools can also provide real-time insights into critical risks and highlight potential areas of non-compliance before they become problematic.

It’s also essential to promote an organizational culture of compliance where employees feel encouraged to speak up about security and compliance issues and have dedicated channels or processes for doing so. Implement mechanisms for employees to provide feedback on compliance processes to enhance visibility and transparency across your organization. 

Regulatory Compliance: Benefits and Best Practices to Keep Your Business Safe

Manage potential risk with regulatory risk management frameworks

There are several risk management frameworks designed to help organizations manage risk and regulatory compliance. These frameworks provide structured approaches to identifying, assessing, managing, and monitoring regulatory compliance risks:

COSO Framework

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework is one of the most widely used for risk management, including regulatory compliance. It offers a comprehensive model for effective risk management that can be applied across industries and sectors.

The framework emphasizes five components: risk assessment, control environment, control activities, information and communication, and monitoring activities. It helps organizations design and implement sound internal controls for managing compliance risks.

ISO 31000 is an international standard that provides guidelines on risk management. It is applicable to all types of risks, including regulatory compliance risks. The framework outlines principles and processes for managing risk that can help organizations increase the likelihood of achieving objectives, improve the identification of opportunities and threats, and effectively allocate resources for risk treatment.

Control Objectives for Information and Related Technologies (COBIT) is a framework primarily for IT management and governance. It is useful for organizations looking to manage compliance with data security and privacy regulations like GDPR or HIPAA . COBIT helps organizations ensure that IT processes are aligned with business goals, managed effectively, and provide optimal information and technology governance.

Basel Accords

For financial institutions, the Basel Accords provide a set of international banking regulations developed by the Basel Committee on Banking Supervision. These regulations involve risk management requirements that ensure financial institutions have enough capital to meet obligations and absorb unexpected losses.

When choosing a risk management framework for regulatory compliance, consider the following factors:

• Industry-specific requirements : Some frameworks may be more suited to certain industries. For example, financial institutions might favor Basel Accords, while tech companies may benefit from COBIT.
• Compatibility with existing practices : The chosen framework should integrate smoothly with the organization’s existing risk management strategy, cybersecurity practices, and business operations.
• Scalability and flexibility : The framework should be scalable and flexible to adapt to the organization’s size, complexity, and changes in the regulatory environment.

These frameworks can help organizations establish a structured, consistent approach to managing regulatory compliance, leading to more informed decision-making, stronger risk management, and continuous compliance.

Navigating the complex terrain of regulatory compliance is crucial for any organization wanting to safeguard its operations against legal penalties and maintain its reputation. Conducting a regulatory compliance risk assessment is an essential process that helps organizations identify, evaluate, and manage the potential risks of non-compliance with applicable laws and regulations.

The steps below will guide you through the process of conducting an effective compliance risk assessment, from defining scope and objectives to implementing controls.

1. Understand compliance obligations

First, you’ll need to understand your regulatory compliance obligations and specific regulatory requirements.

Use these questions to help outline your compliance landscape and determine which laws and regulations you’ll need to adhere to:

• What industry does your business operate in? For example, finance, healthcare, and education each have specific regulatory requirements.
• Do you operate locally, nationally, or internationally? Each geography may have its own set of regulations and enforcement bodies. 
• Does your business handle consumer data or personally identifiable information? If so, what regulations must you comply with, such as GDPR in Europe or CCPA in California?
• Are there industry certifications or standards that you need to maintain to satisfy customer expectations or remain competitive, such as SOC 2 , ISO 27001 , or NIST 800-53 ?
• How do you stay informed about changes in laws and regulations?

2. Define scope

The next step is to identify which aspects of your organization are applicable for the risk assessment, based on the regulatory and security standards you need to adhere to. Consider factors like different product or service offerings, customer requirements, geographical locations, business units, and types of regulatory requirements.

It’s also helpful to define specific goals for the risk management process, such as identifying new compliance risks, evaluating the effectiveness of current compliance measures, or preparing for upcoming regulatory changes.

These questions can help you define risk assessment scope: 

• Why is the risk assessment being conducted now? Is it due to new regulatory requirements, recent non-compliance issues, or as part of a regular review cycle?
• Are certain locations, business functions, or departments more exposed to regulatory risk than others?
• Do regulatory requirements vary by location or product?
• Over what time period will the risk assessment be conducted? Is it meant to capture a snapshot in time, or will it cover a range of dates to observe variations in compliance risk exposure?
• What is the potential impact (financial, reputational, operational) of non-compliance in the areas being assessed? How might this influence the focus or depth of the risk assessment?

3. Assess regulatory compliance risks

The next step in the risk assessment process is to identify where your organization’s policies and practices might not meet regulatory standards or where regulatory changes could impact your compliance posture.

To effectively pinpoint these risks, you can engage with stakeholders and ask targeted questions to understand compliance challenges and operational risks:

• What compliance measures do we currently have in place? How effective are these measures in ensuring compliance?
• What have previous audits revealed about our compliance status? Were there any gaps identified, and have they been addressed?
• Are there any anticipated changes in laws or regulations that might affect our operations?
• Which areas of our operations are most vulnerable to compliance failures?
• Do our partnerships or supply chain relationships expose us to additional compliance risks? How do we monitor third-party compliance ?
• Do we allocate sufficient resources to manage compliance? Are our compliance teams adequately staffed and trained?
• Do we have the necessary technology to monitor compliance and manage regulatory changes?
• How are compliance issues reported within the organization? Is there a clear procedure for documenting and addressing these issues?
• How quickly are compliance issues detected and resolved?
• Are employees regularly trained on regulatory requirements? Is this training tailored to their specific role and responsibilities?

Assess the likelihood and severity of each identified risk. Consider both direct impacts, such as fines and legal penalties, and indirect impacts, such as reputational damage and operational disruptions. You can then prioritize the risks based on their severity and impact to focus resources on the most critical compliance issues.

4. Implement controls

Which internal controls can you implement to mitigate risks? This could include revising policies, enhancing training programs, implementing new technology solutions, or strengthening compliance oversight.

Assigning an owner to each identified risk and defining a risk treatment plan ensure accountability and make it easier to set clear responsibilities for risk mitigation, establish timelines for implementation, and define success metrics to monitor progress.

Ask these questions to help guide your control implementation:

• What mechanisms, policies, and procedures do we already have in place? How effective have these been in ensuring compliance?
• What areas of our operations have historically been prone to compliance issues? 
• Are there recurring themes or specific incidents that highlight gaps or vulnerabilities?

5. Monitor, report, and improve

A shifting regulatory landscape and evolving business practices require organizations to continuously monitor their compliance posture and the effectiveness of implemented controls. Conduct regular internal audits and leverage compliance software to build an efficient regulatory compliance program.

It’s also essential to maintain proper documentation for senior management, the board of directors, and relevant regulatory bodies (if required). This includes risk assessments, policies and processes, internal audit findings, decisions made, and mitigating actions taken. Maintaining these documents will also reflect changes in the regulatory environment, the business model, or the operating context, ensuring that the organization remains compliant as circumstances change and continuous monitoring occurs.

How to Conduct an Effective Internal Compliance Audit

Regulatory compliance risk management with Secureframe

Secureframe’s GRC automation platform is designed to help organizations effectively manage the complexities of regulatory compliance. Secureframe automates processes like continuous monitoring and remediation , evidence collection , policy management , risk assessments , and task management , reducing the time and effort it takes for organizations to understand how regulatory changes affect their existing compliance program.

Our team not only reaches out to notify customers of any regulatory changes affecting their compliance posture, but the Secureframe platform is also built and maintained by compliance experts. Any regulatory changes or framework updates are reflected in the platform, such as PCI DSS 4.0 , ISO 27001:2022 , NIST CSF 2.0 , NYDFS NYCRR 500 amendments, and more.

A recent survey of Secureframe users by UserEvidence found that 95% saved time and resources obtaining and maintaining compliance, and 50% reduced costs associated with their compliance programs. 

Learn more about how our platform can help your organization streamline regulatory compliance management by scheduling a demo with a product expert. 

Use trust to accelerate growth

What is regulatory compliance in risk management?

Regulatory compliance in risk management refers to the process of ensuring that a company adheres to all relevant laws, regulations, and standards applicable to its business operations. This involves identifying the legal requirements that the organization must meet and implementing strategies and controls to ensure compliance.

What is the compliance risk management process?

The compliance risk management process is a structured approach to identifying, assessing, managing, and monitoring the risks of non-compliance with applicable laws and regulations. It typically involves:

• Risk Identification : Determining what compliance risks exist
• Risk Assessment : Evaluating the severity and likelihood of these risks
• Risk Mitigation : Implementing controls to reduce or manage these risks
• Monitoring and Review : Continuously checking the effectiveness of these controls and making necessary adjustments

How to mitigate regulatory compliance risk?

To mitigate regulatory compliance risk:

• Implement robust policies and procedures that align with legal requirements
• Educate and train employees on compliance standards and their responsibilities
• Use technology to enhance tracking, monitoring, and reporting of compliance data
• Conduct regular audits to ensure policies are followed and effective
• Stay updated on changes in legislation that affect your business

How to manage regulatory compliance?

Managing regulatory compliance involves:

• Understanding applicable regulations and how they impact the organization
• Developing a compliance program that includes policies, procedures, training, and monitoring mechanisms
• Assigning compliance responsibilities to dedicated individuals or teams
• Regularly reviewing and updating the compliance program to address new risks or changes in regulatory requirements
• Engaging with regulatory bodies and staying informed about regulatory changes

What are key risk indicators for regulatory compliance?

Key risk indicators (KRIs) for regulatory compliance are metrics used to signal the increasing risk of non-compliance. Examples include:

• Number of compliance breaches or violations reported
• Audit findings that highlight non-compliance
• Employee training completion rates
• Changes in regulatory requirements that have not been addressed
• Complaints or legal claims related to non-compliance

These indicators help organizations monitor their compliance status and act proactively to mitigate risks.

Chapter Meeting

Application of ai in financial analysis and risk management, june 6, 2024.

Advances in technology have increased access and the scalability of AI applications in financial analysis. As firms evaluate the integration of AI into their day-to-day operations, it is increasingly important to proactively assess the potential risks and regulation associated with it.  

Join the GARP Hong Kong Chapter as we discuss how a new pillar of risk has presented itself through the rise of AI and Large Language Models (LLMs) and how these risks are best managed within organizations, and what role we, as risk professionals, can play in ensuring the safe and ethical use of AI within the financial services sector.  

Registration is required as seats are limited. Priority will be given to GARP Individual Members.

6:00 – 6:30 pm: Registration

6:30 – 6:35 pm: Welcome remarks

6:35 – 7:25 pm: Presentation/Panel discussion with Audience Q&A

7:25 – 7:30 pm: FRM® and SCR® recognition ceremony

7:30 – 8:30 pm: Networking reception

June 6, 2024 6:00 PM - 8:30 PM

Renaissance Harbour View Hotel, 1 Harbor Rd, Hong Kong, Wan Chai

Daniele Forni, FRM Director, Credit Insights and Intelligence, HSBC

Kevin Kwan, FRM Global Head of Data Science, Enterprise Data - Bloomberg

Chapter Directors

Kent Lai Head of Enterprise Solution Sales for Govt and Local Brokers Bloomberg LP

Hung Wai Wong Managing Director North Point Talent

Committee Members

Ron Chiong Managing Director AvantFaire Investment Management Ltd.

Samuel Lo Managing Director Life Academy Limited

Agnes K Y Tai Senior Partner & RO Yaozhi Asset Management International Co. Ltd.

Daniele Forni, FRM

In his career, Daniele has worked for two financial institutions (Deutsche Bank and HSBC) across four countries (Italy, UK, China and Hong Kong). Currently he is Director, Credit Insights and Intelligence in HSBC, delivering analytical and MI solutions for HSBC front line bankers and portfolio risk managers.  

 He started his career for Deutsche Bank in Credit Risk delivering regulatory projects. He subsequently joined HSBC Group to work on portfolio risk management as a quant and risk manager and later as a program delivery lead focusing on data science and advanced analytics.

Kevin Kwan, FRM

Kevin leads the quant and data science solution developments at Bloomberg Enterprise Data. His team designs and develops proof-of-concept models and visualizations to extract insights from financial data using cutting edge data science, AI and machine learning techniques. Kevin has over 10 years of experience applying quant and data science techniques in investment processes.

Kevin is a Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM) Charterholder, and holds Bachelor's and Master's degrees in Aerospace Engineering from Purdue University.

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Asset management, / report, ai and the next wave of transformation, global asset management report 2024.

By  Dean Frankle ,  Alex Belyakov ,  Johannes Burkhardt ,  Joe Carrubba ,  Peter Czerepak ,  Lorraine Felix ,  Paul Hutchinson ,  Bingbing Liu ,  Maitreyee Malpekar ,  Michele Millosevich ,  Kedra Newsom Reeves ,  Edoardo Palmisani ,  Ian Pancham ,  Neil Pardasani ,  Ella Rabener ,  George Rudolph ,  Lior Valitsky ,  Andrea Walbaum , and  Ivana Zupa

The global asset management industry’s assets rose to nearly $120 trillion in 2023, reverting from a decline the year before. However, asset managers are facing a variety of challenges to their growth. Investors are gravitating to passively managed funds and other products that have lower fees even as asset managers’ costs increase. Their efforts to create new products that would differentiate them from competitors have largely fallen short, with investors sticking mostly to established products with reliable track records. Historically, the industry has been able to weather these pressures thanks to revenue growth that has been largely driven by market appreciation. In the years ahead, however, market appreciation is expected to slow, creating further challenges to the industry.

In the face of these pressures, asset managers will need to rethink the way they operate in order to maintain the growth and profitability of past years. The most viable way forward is by using an approach that we call the three Ps: productivity, personalization, and private markets. Asset managers should increase productivity, personalize customer engagement, and expand into private markets.

As the artificial intelligence (AI) technological revolution gathers momentum, asset managers have an opportunity to invest in AI and integrate it into their operations in ways that can enhance a three Ps strategy. AI can boost productivity by enabling improved decision making and operational efficiencies. (See the exhibit.) It can be leveraged to create and manage personalized portfolios at scale and to tailor the customer experience. And AI can enhance the efficiency of deal teams in private markets and boost their ability to drive value creation. In adopting AI to facilitate these key moves, asset managers should view the technological possibilities as transformational tools for their organization.

As part of this year’s report, we surveyed asset managers with collectively more than $15 trillion in assets under management to gather their views on the role of AI in their business. The vast majority of survey respondents expect to see significant or transformative changes in the short term, and two-thirds either have plans to roll out at least one generative AI (GenAI) use case this year or are already scaling one or more use cases.

Waiting is not an option when it comes to investing in AI. The technology is rapidly developing, and asset managers that do not start their journey now risk being left behind.

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