Clouds of Vagueness
risk tolerance
The profession that knows it all
The theme which underpins Clouds of Vagueness is the inherent difficulty of mastering an uncertain future and the inadequacy of our standard risk management techniques to help with this. So I was delighted to see the paper by Michael Power of the LSE in the journal Accounting, Organisations and Society, with the provocative title The risk management of […]
Risk appetite – a bad idea
It’s a truism that you can’t do anything – or even nothing – without taking risk. This is an important issue for all organisations, but the discussion of what risk to take has become unnecessarily obscured. Specifically it has become bogged down in the unhelpful concept of ‘risk appetite’ and this has added to the […]
COSO on risk appetite – reaching for the ideal
COSO have also issued guidance on the ‘risk appetite’ to go along with that of the IRM and other authorities. I think it’s a good example of how risk appetite would be dealt with in an ideal world. By this I mean a world with two characteristics: you could decide how much risk you wanted to dial […]
The RARA model – how relevant to organisations?
A very useful model for thinking about risk taking has been created by David Hillson and Ruth Murray-Webster. In contrast to the IRM guidance it is rigorous and well thought through. The model consists of an influence diagram in which the nodes and influences have been well-defined. Thus the model makes an interesting and valuable contribution to the risk […]
The IRM on risk appetite – whatever does it mean?
The IRM has been inspired to issue guidance on risk appetite and risk tolerance. It’s very questionable though whether this helps us make much progress on organisational risk taking. Like many articles on risk matters it gets bogged down in a morass of vaguely relevant ideas so illiterately and unrigorously described that many sections are devoid […]
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