Evolve Your Approach to Risk Management. From management-by-colours to hard numbers

Seven key weaknesses of a qualitative approach to Enterprise, Operational, Cyber and Third-Party Risk.

    • Risk ratings reflect personal judgement, not evidence.

    • Different teams rate the same risk differently.

    • Biases (optimism, politics, recency) distort results.

      #Enterprise Risk, #Operational Risk, #Cyber Risk, #Third-Party Risk

    • Description text“High” doesn’t reveal whether loss is £100k or £10m.

    • Boards, regulators, and insurers need quantified exposure.

    • Hard to link to revenue, cost, or service outcomes. goes here

      #Enterprise Risk, #Operational Risk, #Cyber Risk, #Third-Party Risk

    • Description text goes hereWithout numbers, it’s impossible to rank risks.

    • Budgets get spread thinly instead of targeted.

    • Critical risks may be underfunded while minor risks get attention.

      #Enterprise Risk, #Operational Risk, #CyberRisk, #Third-Party Risk

    • Item descriptionYou can’t roll up “reds/ambers/greens” into enterprise exposure.

    • Concentration risk and interdependencies remain hidden.

    • No ability to model systemic or cascading effects.

      #Enterprise Risk, #Operational Risk, #Third-Party Risk

    • Item descriptionMost assessments are workshop-based snapshots.

    • They fail to keep pace with fast-changing risks (cyber threats, supplier health, operational disruptions).

    • Early warning indicators get ignored.

      #Operational Risk, #Cyber Risk, #Third-Party Risk

    • Item descriptionRegulators (Basel, Solvency II, DORA, NIS2) expect quantification.

    • Auditors and investors see qualitative-only frameworks as immature.

    • Perception of “box-ticking” undermines credibility.

      #Enterprise Risk, #Operational Risk, #Cyber Risk, #Third-Party Risk

    • Can’t feed into stress testing or scenario modelling.

    • No basis for capital allocation, M&A risk due diligence, or crisis planning.

    • Limits the role of risk management in strategy execution.

      #Enterprise Risk, #Operational Risk, #Cyber Risk, #Third-Party Risk