The Paradox of Risk

Author: Daniel Valentine is Head of Communications at CGIUKI

Risk is now a mainstream topic of conversation. In the past, risk was associated primarily with fast-moving innovative businesses (and with particular events such as product launches); but the UK’s risk landscape has changed radically in the last decade as a result of major shocks (Brexit, Lockdown and the Ukraine-Russia war) and a bewildering variety of risks now threaten organisations of all types. The public sector and charities are no longer operating in a low-risk environment. Risk management has become a universal requirement.

Over the last 50 years risk has evolved into a major field of study, practice and consultancy, and has sub-divided into many sub-specialisms such as “supply-chain risk”, “credit risk” and many more.

Yet one of the many paradoxes of modern life is that despite the growth of risk management, risk reporting, risk audits and risk planning, we see a daily stream of failures, scandals and disasters which challenge and threaten organisations. The confidence which past generations possessed that our society and economy would become more stable over time has long dissipated; risk is here to stay.

Indeed, the risks confronting organisations in 2025 are more complex, interrelated, and fast-moving than ever before. Europe faces escalating geopolitical, regulatory and economic risks for the foreseeable future. These vulnerabilities underscore the need for robust risk management strategies.

Without a clear framework of risk management, an organisation risks either ignoring risk (and letting it accumulate) or else over-reacting and doing themselves harm by trying to totally eliminate risk (which is usually a bad idea).

Has the last decade of trauma made the UK too risk averse? Julia Hoggett, CEO of the London Stock Exchange seems to think so. Hoggett has called for a national conversation on how the UK can increase its appetite for risk. Speaking on the “Following the Rules” podcast, Hoggett said: “We have not had, as a nation, a proper conversation about the risk of not taking risk”. Hoggett is right to be concerned that equity markets cannot thrive in a culture of risk elimination. Equity markets are where risk-taking boards should meet risk-taking investors; but without an appreciation and tolerance of risk from both parties an equity market will ossify, as we are seeing in the UK.

Risk is essentially complex and diverse. There is no single risk-framework that will suit all organisations. A pharmaceutical firm will need a very different risk framework from a bus company; but both need to take risk equally seriously. 

Governance professionals are central participants in the management of risk. Their knowledge of regulations, legislation and best practice makes them key advisors when risk is being discussed. Even more fundamentally than this, it is often the governance professional who initiates the risk discussion in the first place, by ensuring that the risk is included on the board agenda as soon as it is detected.

In light of this a number of questions naturally arise for governance professionals and board members:
•    What risk-related regulations and legal obligations does the board need to be aware of?
•    How can my organisation design a risk framework which promotes the right approach to risk, and which allows experimentation and innovation?
•    How can I encourage managers in my organisation to assess their business activities from a risk perspective?
•    How can my board monitor risks across the whole organisation?

The good news is that CGIUKI has two half-day courses which will give you answers to these questions:
1.    Masterclass in developing and implementing an effective Risk Management Framework is an introductory course offering an overview of the risk management fundamentals.
2.    Risk Governance and Leadership Masterclass  is aimed at senior executives and board members who own, manage or have oversight responsibilities for risk.

If you prefer in-house training, email Tara Wilson on enquiries@cgi.org.uk to discuss your requirements.