Strategic risk: how to bring it to the boardroom

What strategic risk is, what managing it requires and how to present it to the board so it can decide.

Interview summary

Andrés Felipe Manrique defines strategic risk as the risk that arises from an inadequate understanding of the risks and particularities of the business when the business plan is drawn up. These factors fall mainly into seven categories; they are normally outside the control of the organization, but they must be monitored closely so that the goals agreed with shareholders and the board are not put at risk.

To manage it effectively he argues that a well-defined corporate governance is needed, with participation from shareholders and senior management down to every level, because here the main person responsible is senior management. Senior management sets the risk appetite statement and clear indicators that go beyond a traffic light: it must be known what decision to take and when to change the course of the strategy. Before the board he recommends translating the technical into what matters, how much an event costs and which strategic objectives it puts at stake, and seating those who execute and those who define the strategy at the same table.

Topics covered

• What strategic risk is and how it relates to the business plan
• Seven risk factors that shape medium and long-term planning
• Corporate governance and the responsibility of senior management
• Risk appetite statement and indicators that lead to decisions, beyond the traffic light
• How to communicate risk to the board: cost and effect on strategic objectives
• Execution and strategy at the same table