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Good risk management programs need to start with a set
of principles, driven from the board and management, that define how
an organization wants to view risk and to provide guidance to its overall
efforts. Principles establish the broad parameters by which the
organization will make decisions and establish policies and processes.
The list below is merely an example of some of the
principles used by various organizations. They need to be customized
to a specific organization and its risk management goals.
EXAMPLE PRINCIPLES
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Enterprise View - Risks
will be viewed in the context of their aggregate ability to
impact the goals and objectives of the entire organization. Risks will be balanced between those
related to actions and activities and those related to inaction
acknowledging that sometimes the largest
risks are related to inaction.
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Common Language -
Everyone in the organization needs to be able to communicate about risks
with an equal understanding of what the risk is, why it exists and what its
implications are to the long term success of the organization.
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Anticipatory Attitude - The risk
management process needs to look beyond the details of today's operations
and near term constraints. It
needs to look to the future, identifying
sources of uncertainties, anticipating potential outcomes and considering
future opportunities.
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Information/communication - Risk management depends on free-flowing information at and between
all levels of the organization. Open, honest and frequent communication is
to be expected and rewarded.
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Integrated -
Risk management needs to be an integrated part of the business
processes where those risks will be managed. Adapting risk management methods and tools to
the unique needs of the different parts of our business is not only
acceptable, but is expected.
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Continuous
- Risk management requires constant vigilance. Identifying and
managing risks routinely through all changes in business conditions or the
business environment is a prerequisite to success.
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