A healthy approach to risk is one where a board has a robust framework in place which allows it to focus on the most important threats. Success will mean an organisation is not only resilient and well-drilled in how to avert or respond to a crisis, but strategically directors will be able to make informed decisions that can outsmart the competition.

Alison Carnwath, Chairman of commercial property and investment company Land Securities Group, says: “In 2010, we took a gamble to start our big development programme in London. There were commentators at the time who said we were taking a very risky view on life... but we calculated financially, and in the context of the property cycle, that we were doing the right things... and we’re seeing the payoffs now.”

What risk cannot be is purely a box-ticking exercise. Barbara Moorhouse, Non-executive Director of the Lending Standards Board, comments: “As directors we have very well developed models for good governance, internal controls, and risk management. Professional services firms in the UK – accounting and legal – would rightly see themselves as setting high standards by international comparisons. While this may help the balance of the UK’s ‘invisible trade’, it may increase the focus on governance issues disproportionately."

Board directors must have the time to think strategically. Allan Cook, Chairman of engineering consultancy Atkins, says: “The balance between risk and strategy, and taking full advantage of opportunities that exist, is down to the quality of the leadership in the company. It’s in the balance that you have between the executive and non-executive directors.”

A system should be in place whereby directors aren’t overloaded with information. “Boards need to focus on the big risks and make sure that they are properly considered, debated and addressed,” says Andrew Allner, Non-executive Chairman of public transport concern Go-Ahead Group. “You can end up with an incredibly long list which is not particularly helpful, and there’s a lot of stuff that, really, shouldn’t take up the time of directors.”

Peter Shore, Chairman of telecoms concern Arqiva, comments: “We have developed a risk matrix... [whereby] only the top ten risk items come up through the business to the main board... If they aren’t realistic or actionable, or it isn’t a material performance risk, they don’t actually make it onto our risk register.”

For chief risk officers (CROs), internal auditors and chief finance officers, this is posing some interesting questions about how to manage data, the general flow of information and what should be communicated to risk committees. Sue Kean, CRO at financial conglomerate Old Mutual, explains that while wide-ranging monitoring reports and trend analysis are conducted and examined, only identified trends or exceptions are passed up to the board.

Across an organisation, there has to be an embedded sense of accountability and openness. Judith Nicol, Director at executive and non-executive recruitment specialist Warren Partners, comments: “You have to make sure there are internal processes to measure and monitor known areas of risk. But perhaps the more difficult thing for boards is to ensure they have a culture and a system in place to allow issues of concern to be surfaced that may not even be on their radar.”

Getting this right is easier said than done, especially for global entities. Peter says, “If you're across a whole range of countries I think [the question of risk management]… is increased, because the probability of something going wrong in those countries is increased...

“Rather than tight central controls, you've got to find a way to distribute some of the decision-making authority and risk assessment. That then has to take account of different cultural and business practices and markets, regulatory risk and the whole swathe of things that you have to deal with. It's just bigger and more complex.”

At board level, a mix of individuals will be needed, including experienced non-executive directors who are bold enough to provide a different perspective, while not acting like blockers. Allan says: “Having a balanced board means that you’re able to take a longer-term view, in terms of what you should be looking at with regard to risk, and actually what [you] should be looking at in terms of strategic options.”

I hope to see you soon.