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13 April 2015

Education "the most important aspect of risk management"

Content team

Education is the most important aspect of risk management, according to a leading professional in the sector.

Grace Crickette, who has served as a chief risk and compliance officer for a number of organisations, and currently works for AAA of Northern California, Nevada & Utah, said the top priority for risk managers is to inform people within their organisation about what risk really is.

In an interview with the Wall Street Journal's Risk and Compliance Journal, she claimed risk is an "indispensable part of every business decision, not a negative to be avoided".

"People in general have been thinking of risk as something negative, not understanding that every decision you make has some built-in risk," Ms Crickette added.

She said a chief risk officer's "number one job" is to remove this confusion and help an organisation's staff have a better understanding of risk.

The expert claimed this should be risk and compliance leaders' main focus, rather than simply trying to identify the biggest threats their business is faced with.

Ms Crickette argued this is particularly important as the greatest risks tend to be related to people, as well as strategy and technology.

She recommended carrying out an enterprise risk review to calculate residual risk, as this can help organisations make a small number of changes that can potentially tackle a wide range of threats.

The expert added that from a financial perspective, this can help businesses decide how they will fund risk management and whether they should retain or insure it.

In March, Compliance Week reported on a survey carried out by North Carolina State University, which revealed 60 per cent of companies believe the volume and complexity of the risks they are facing has increased over the past five years.

Content team, Bureau van Dijk

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