By Daniel Hunter

A new guide to business risk, published by the Institute of Directors (IoD) in association with Airmic, Chartis, PwC and Willis, urges UK Board members to improve their understanding and management of risk in order to successfully deliver growth and prevent future crises.

Business Risk — A practical guide for Board members features contributions from a range of expert authors from across business and academia, and makes the case that:

· Risk — and particularly strategic risk — are more important elements of a director’s job than they have ever been

· Despite large amounts of media space having been devoted to the allocation of blame for the financial crisis, there remains much practical work to be done hardening companies in order to prevent future risk failures

· Understanding how to assess risk at board level, and understanding how the Board should interact with risk professionals, are essential skills for all directors

Risk is an inherent and inevitable element of making decisions and developing a business. The Guide seeks to inform non-executive directors about how to avoid pitfalls, gain access to crucial information and ultimately bolster decision-making in order to mitigate unnecessary or excessive business risk.

The authors lay out in detail the roles and responsibilities of the board in assessing and managing business risk, the risk challenges currently facing UK businesses and the structural, personal and strategic solutions which can be used to address these challenges.

Simon Walker, Director General of the Institute of Directors, said:

"If companies and the economy as a whole are to grow in today's environment, it is vital that directors put risk management at the heart of business strategy. Understanding risk helps you to become more enterprising without jeopardising your business. On the other hand, take the wrong kind of risk and you are heading for disaster, whilst avoiding risk altogether means you are condemned to stagnation. This guide will help directors get this crucial balance right."

John Hurrell, Chief Executive of Airmic, said:

“Directors have a vital leadership role when it comes to risk management within their companies, which is often misunderstood. This guide helps to convey our message that risk management can help to facilitate profitable strategies as well as making firms more resilient.”

Alpesh Shah, Director in PwC’s Actuarial Risk Practice, said:

“There are few aspects of a board's functioning that are as crucial to long-term corporate success as risk management. Organisations that understand the risks they face and can articulate their risk appetite and define their risk strategy accordingly can have better decision-making, greater agility and a sharper competitive edge. The practical points in this guide will be invaluable as Board members strive to achieve this."

Nicolas Aubert, MD of Chartis in the UK, said:

“More than ever risk managers need to be represented on company boards to help protect not only their companies but, more importantly perhaps, Board members themselves from underestimating the risks and sanctions they personally face. This practical guide should help them raise their profile at the highest levels within their organisations.”

Daniel Wilkinson, CEO of Willis UK, said:

“Unpredictable emerging threats like cyber, reputational and supply chain risks require Boards to take a long-term focus on building resilience throughout their organisations rather than having a traditional risk management policy based solely on anticipation. The resilience approach will help companies respond quickly and dynamically to threats by ensuring that the right expertise and processes are in place.”

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