How Risk Relates to Your Company Strategy (Third Party Risk Management: The Basics Course)

Presenter:
Welcome back to the BVA Risk Management Basics course. I'm Nick Francis, the Chief Product Officer at Brooklyn Vendor Assurance (BVA), and today, we're diving into Chapter Three. In this chapter, we'll explore how the principles you've learned in Chapters One and Two are applied in a corporate setting, specifically within a company's strategy.

Topic:
As we shift from a personal context to a corporate context, we'll focus on risk management's role in company strategy using a fictional company called Big Bank as an example. Big Bank has established a comprehensive strategy with specific objectives aligned with the organization's goals. These objectives are the equivalent of personal goals you've encountered earlier in the course.

Within this corporate strategy, we examine the value drivers that will lead Big Bank towards achieving its objectives. These drivers are the strategic actions the company must take. Just like in Chapters One and Two, identifying risks becomes crucial in this context. We explore the key risks that pose potential challenges to Big Bank's strategy.

To effectively manage these risks, we introduce key risk indicators (KRIs) as metrics that track risk levels and help prevent issues from arising. Similar to treatments and actions in Chapters One and Two, Big Bank employs risk assessments to continuously evaluate and manage the identified risks.

To safeguard against potential issues and crystallization of risks, Big Bank implements key controls. These controls serve as preventative measures to mitigate the risks and their underlying causes. Key control indicators (KCIs) act as performance metrics for these controls, allowing Big Bank to proactively address any issues that may arise.

Throughout this chapter, we touch on risk appetite, the amount and type of risk Big Bank is willing to undertake to achieve its objectives. We also highlight how certification frameworks like ISO and Sarbanes-Oxley (SOX) play a role in measuring and maintaining the effectiveness of risk management practices.

With this understanding of risk management within a corporate context, you'll be better equipped to apply your everyday risk management skills to strategic decision-making in your organization. In Chapter Four, we'll delve deeper into key performance indicators (KPIs), KRIs, and KCIs, providing practical examples to further enhance your risk management knowledge. Join me as we continue our journey through risk management's fundamental principles in the next chapter. Thank you, and see you soon.