Chief Risk Officers are expected to provide timely visibility into emerging and evolving risks, guiding the business towards optimised risk-reward decisions. They must protect the long-term strategic value of the business (its reputation and integrity), while managing short term tactical issues; balancing credible challenge to business growth strategies, while constantly pushing for progress and improvement.
The quality of the Chief Risk Officer’s decisions is improved by building a body of knowledge that describes the business’s goals, its procedures to reach those goals, and the environmental constraints it must operate within. This is then enhanced with historical data of what has worked before and what has not worked, what brought success and why, what caused loss and how.
red flare risk provides the information needed by the Chief Risk Officer with risk registers recording the challenges previously dealt with, currently being managed, and those emerging trends that require contingency planning. Each risk is further described by how it was mitigated, treated or controlled; and how effective the mitigation, treatment or control turned out to be. Near misses, good catches and actual losses are also associated with each risk, and although past performance does not predict future results, it does provide a baseline for risk-aware decision-making.