Risk management forms an essential and integral part of the strategic planning of an institution.
Purpose
The purpose of this practice is to mitigate potential risks to an institution. The institution assesses risks and formulates effective measures to deal with them. The governing body is responsible for maintaining a risk register that ensures appropriate steps are taken to manage and mitigate risks. Detailed scrutiny of risks could be undertaken by a sub-committee, such as an audit and risk committee. Management needs to ensure that the governing body is fully apprised of any risks to which the institution may be subject to, and will take shared ownership in managing such risks.
Outcome
The outcome of employing this practice is the strengthening of the stability and sustainability of the institution. The practice informs decision-making, avoids threats and undesirable consequences, and increases the chances of achieving strategic goals.