Mastering Risk Management

RISK POLICY

Having agreed on a framework in which the key elements of risk management have been identified, the second element of governance is to formulate a risk policy.

A clear risk policy supports the organisation in achieving its business objectives. Along with the framework, it also allows the board and senior management to communicate to all staff the approach of the firm to risk management. As such, the policy should be approved by the board. The executive or management committee may develop the policy document or, at a minimum, review and comment on it, but ultimate responsibility for approving and implementing it rests with the board.

The contents of a risk policy vary from firm to firm and are dependent on the firm’s culture and the ...