Member case study

Embedding risk appetite through the business
October 2024

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We have developed risk appetite statements with the board and they’re working quite well at the senior level. Now, the risk team is trying to decide: should we leave and optimise appetite as a tool to aid decision-making at the board/executive level only, or should it be cascaded down to other parts of the business?
Risk Leadership Network member

CRO at an ASX-listed retail organisation

What we did

1. Created a bespoke benchmark on risk appetite implementation and optimisation

With the member closely involved in developing the question set, we created a bespoke benchmark on risk appetite implementation and optimisation.

This benchmark enabled the member to see how 120 large non-financial organisations in a range of geographies and sectors are using risk appetite in their organisations. In particular, we wanted to understand how many of the participants just use appetite at the senior level and what percentage cascade it through the business.

Find out more about the benchmark here.

What we did

2. Facilitated a series of 1-to-1 meetings

We then set up a series of 1-to-1 calls for the member with:

  • Risk leaders at organisations we know have risk appetite cascading effectively down.
  • Risk leaders who have optimised the use of risk appetite as a decision-making tool at board/executive level without cascading down.
This allowed the member to dig deep on what was working in other organisations, and decide which of the two broad approaches would work best for them.
What we did

3. Validated approach through a network meeting

Once the member had decided which approach to take, we organised a wider network meeting. At the members request, we invited peers who were more mature in their approach to attend.

The member presented their revised approach to experienced peers who gave feedback prior to implementation.

 

The result

How this helped

1

Saved time

The member was able to take tried and tested methods back to their organisation to optimise risk appetite.

2

Externally validated approach to the board

The benchmarking data helped persuade their board that the risk team had chosen the right approach to risk appetite.

3

Gave direction to external consultants

As they were confident they’d chosen the right approach for their business, the member was able to direct their external consultants in a more targeted way, which helped avoid spiraling costs.