My Definition of Effective Risk Management

I have just been quoted in an article in Norman Mark’s blog – ‘How Do You Determine Whether the Risk Management Process Is "Effective"?

This was my response: Effective risk management is when each risk event identified is examined through the lens of both the direct loss to the firm and indirect losses that may arise because of damage to the firm’s reputation associated with the event.

My definition has evolved from working with clients where I could see the imbalance the risk management process i.e that too much attention was placed on financial losses.

Those readers who received my Powerlines newsletter Nr. 89 dated Nov 2009 will recall my article ‘One Event, Multiple Stakeholder Impacts’ in which i showed the danger of how one event could have multiple stakeholder impacts.

That is the type of danger that exists when you do not view a risk event and put it through the stakeholder lens.


  1. Ken Simpson

    Interesting post Deon, do you find that this perspective can be adequately applied by line managers – or should it be left to specialists in PR/Corporate Comms to undertake?

    I assume you see “effective RM” as needing a broader approach than simply this test?

  2. deonbinneman

    I believe that we should build awareness, understanding and capacity at every level in the organization.

    Hence a question that every single employée needs to learn:” If I do this, will it har our and my own good name”.

    It is not good enough to make it the domain of one department. See also my post on the Chief Reputation Officer.

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