Strategic risk involves the most consequential risks the firm faces, their likelihood, and their potential effect on credit. Some questions on strategic risk that each organization should ask themselves:
How does our organization review the frequency and nature of top risks? Is there a formal statement by our organization’s management team regarding which risks the organization can tolerate and which it cannot? Does our executive team understand the litigation trends affecting their lines of business, and do we seek appropriate risk treatment, such as purchase of adequate insurance coverage? Are the risk management team’s considerations consistently taken into account in all organization-wide decisions.
