Risk management is an enzyme
22 June 2020, 10:00:00
There is a view that risk management and compliance are just cost centres within businesses. How about we changed our perspective and looked at risk as a facilitator, like and enzyme?
Phosphofructokinase (PFK) is an enzyme within our bodies.
It’s found in our muscle cells.
It facilitates and regulates energy production for exercise by influencing the biochemical process, glycolysis. It’s rate limiting.
PFK is ingenious, as it is able to regulate glycolysis through a balancing act called “allosteric inhibition”, and in this way, the cell can increase or decrease the rate of glycolysis in response to the cell's energy requirements.
Perhaps risk management is the PFK in our businesses, acting as an enzyme a facilitator, which when executed with consistency and validity can provide organisations with high quality information to promote good decision-making.
It can regulate in a precise way the levels of risk we want to take, balanced against our opportunity.
Risk management is not a cost centre, in fact neither is compliance, although you know, I don’t think ‘compliance’ exists.
The effective management of risk, makes opportunities more visible, more possible, more clear. It allows businesses to accelerate, slow down, even stop and pause, if required.
If we treat risk management like an enzyme, a catalyst and regulator to the direction and pace of our businesses, we are likely to experience better outcomes.