Risk-Based Strategic Decision Making

Risk Appetite and Risk Tolerance – Which Definitions Do You Use?

In follow up to our recent article on handling risks that exceed the company’s appetite, we would like to share this perspective from our friend Hans Læssøe on this complex and controversial topic. Hans’ article below describes how the world’s leading risk management standards, COSO and ISO 31000, have differing definitions on risk appetite and…
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Performance-Focused Risk Management: Tying It All Together

Today’s article is a reprint of the last of four guest editorials originally published in The Demotech Difference, a journal targeting small- to midsize property and casualty insurance companies. The first three articles in the series delved into the foundations of building a performance-focused risk management process, specifically the importance of culture, identifying the company’s…
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29 Biases and Traps that Prevent Good Decision-Making

It seems like bias is everywhere in our world… Some bias is healthy and normal. We may have a bias for or against a certain sports team or those of us who are parents will naturally be biased toward our children. But when it comes to decision-making in our organizations, bias can lead to putting…
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Will Inflation be a Gray-Rhino in 2021?

Soon after COVID-19 began affecting the U.S. last March, I spotted a brief article on LinkedIn from Hans Læssøe explaining how the pandemic was not a “black swan” event as some were saying but rather a “gray-rhino.” As you may know, a “black swan” is an unforeseen, improbable event, be it positive or negative, which…
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Top 21 Risk Management (…and Other) Resources for 2021

Happy New Year!! As of this writing, the year 2020 is officially in the rearview mirror. Suffice it to say that between the COVID pandemic, a contentious election year here in the U.S., a record-breaking hurricane season, and other challenges, we are all glad to bid the past year farewell. Personally, the year had its…
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ERM in the Spotlight

In times of great upheaval for industries or financial markets, organizations often turn to the formal discipline of enterprise risk management. After the 9/11 terrorist attacks and the 2008 financial crisis, for example, ERM gained traction as many organizations realized the significant drawbacks of a traditional siloed risk management approach. But widespread ERM adoption remains…
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future of risk management

Is Quantitative the Only Future of Risk Management?

Quantitative methods for understanding how risk and uncertainty impacts the organization is a subject I’ve been focusing on more this year. Without a doubt, modeling, Monte Carlo simulation, and other advanced math-based methods can be a valuable tool for helping decision-makers in certain companies. Many risk management thought leaders, including some I quote often like…
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planning sessions

3 Simple Steps to Be Invited to Strategic Planning Sessions

One issue that executives, Board members, and other company leaders continue to raise in surveys and elsewhere is that ERM doesn’t provide strategic advantage or valuable insights to decision-making. Reports received by business unit and company leaders typically regurgitate a list of risks and rehash what they already know. As we discuss in this post…
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