How to drive greater risk awareness by strengthening partnerships with Strategy

4 min read
May 14, 2024
How to drive greater risk awareness by strengthening partnerships with Strategy

Many risk teams experience challenges when it comes to establishing their involvement in the organisation's strategic decision-making process. While risk teams are trying to get involved at the outset of strategic planning, our members tell us they're often brought in at the end — once the strategy has already been agreed — to assess the risks.

So, how does Risk get a seat at the strategy table? One of our members raised this as a risk priority, and we've facilitated a series of collaborations to support them. 
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Although there are no "easy wins", risk leaders identified strengthening the partnership between the Risk and Strategy functions as a good place to start. Most risk leaders said that although they have regular touch points with their Strategy colleagues, those interactions are rarely formalised and can be inconsistent. 
Here are four approaches to optimise partnerships between Risk and Strategy, shared by practising risk leaders in high-performing teams:

1. Convene before and after strategic planning sessions

Of course, the first challenge is to make sure that Risk is represented at strategic planning sessions. But once you're on the attendee list, it might be helpful to schedule a discussion with Strategy before and after strategic planning meetings.

What to discuss

Risk can outline how the business' existing material risks (and any emerging risks that are being monitored) may affect the organisation's strategic outlook.

A debrief so that Risk and Strategy can determine the major takeaways from strategy sessions. The two functions may benefit from fleshing out how strategic objectives should be reflected in the risk profile of the organisation.


2. Work together on outreach to the business

In order to realise the organisation's long-term goals and strategy, business units are expected to develop execution plans, outlining how they will achieve their objectives.

If you're considering how to provide central assurance over these plans, it may be more engaging for Risk and Strategy to go to the business together as one unit, rather than two separate functions.

It is especially important for Risk to be involved in this process, as business units need to factor both threats and opportunities into their plans. Some organisations are even working with the business to map their material risk profile onto specific goals and objectives, as highlighted in the approach below.

Three levers approach

One method of linking material risks to strategy is to think about three strategic levers: cost, time and quality. One risk leader explained that a risk could be viewed as having an impact on strategic objectives via one or more of these three levers.

The business should decide which of these three levers is the most "strategically important" to delivering the objective at hand; i.e. is it more important to deliver this objective within a certain time period, within a certain budget or to a particular standard. This should decide the focus of any risk mitigation.


3. Decide formally how Risk and Strategy should interact

Some risk leaders have suggested that Risk should sit under the Strategy arm of their organisation.

“As Risk sits under Strategy, communication between myself and other members of the group is quite simple. As a result, our interactions are more ad-hoc in nature and not really formalised.”
CRO, FTSE organisation

Risk Leadership Network members

Meanwhile, other risk leaders believe that the two functions should retain some independence.

If Risk and Strategy teams remain independent from one another — i.e. they sit under different functions at the corporate level — it may be easier for Risk to challenge the strategy, as the Risk team will have an external, unbiased perspective.

However your organisation decides to structure the teams, make sure you adapt your communication processes accordingly.

Member case study
Embedding risk into strategic decision-making 

These are just some of the practical insights shared as we supported a member organisation with the challenge of aligning Risk and Strategy. Watch the full case study to see how we helped:

See more details on how we helped this member here.

This article shares some of the high-level takeaways from the collaborations we facilitated for this member. Of course, more details and practical insights were shared with our members involved. Book an introductory call to see how we could facilitate peer-led collaborations to help with your biggest challenge.


4. Incorporate a risk champion into the Strategy team

If Risk and Strategy do sit in separate business functions, some risk leaders are embedding a risk champion into the strategy team. The benefits are two-fold.

  1. This risk champion can provide a risk-based perspective to activities being undertaken by the strategy team, ensuring that any initiatives being launched are risk-assessed before they begin.
  2. The risk champion can also feed back to Risk on the latest strategic developments, establishing a consistent flow of intelligence between the two teams. 
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What's next?

Most of the risk leaders in our network are not planning major changes to how they collaborate with the Strategy team. However, many have expressed that there is room to establish a more structured and regular cadence of meetings and projects between the two functions. 

We will be supporting risk leaders as they look for ways to influence strategic decision-making — and any other risk priorities they raise with us. To learn more about what we've got coming up, book an introductory call or find out more about membership on our website.

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