Risk management predicated on a mix of standardized risk tracking and cultural norms falls short. The only way for risky behavior to create value is if it is logically and precisely directed.
ROI for risk systems is judged by more than profitability – the amount of risk reduced. David Gumpert-Hersh from Wescom Credit Union says that you also have to look at the opportunities the purchase opens up and the potential for increased productivity.
How do you measure the return on investment of risk management and risk management systems? In this article by Boaz Galinson, Bank Leumi measures ROI in more effective use of capital, regulatory compliance and value creation.
Is your firm making data-driven decisions? Or is it following the herd and overestimating or underestimating the risks associated with investments, product releases or customer needs? Read this post about the dangers of ‘availability bias.’
This conversation with Dr. Bob Mark is one of many with risk officers to help answer the question, “How do executives know that their investment in risk management systems are being directed toward the right outcomes?”
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