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CFO Opinion: How to Map Your Risks

February 15, 2013, 07:14 AM
Filed Under: Industry News

Traditional risk heat maps focus only on the downside of risk. But CFOs and CROs need to be able to visualize the opportunities for creating value that exist by taking risks.

Over the last ten years, many companies have adopted an enterprise risk management (ERM) framework and launched the process by taking steps to identify and assess their risks. But such an exercise for a global company can involve developing a list of risks that could number in the hundreds.

Such an expansive list of risks requires organization. One approach to organizing the list is to create a “risk register,” which enables categorizing, sorting, and ranking the risks. To inject order into a cumbersome risk register, CFOs and chief risk officers can plot their companies' most material risks on their registers a “risk map.” Serving as a kind of executive summary of the risk register, the map amounts to a graphical snapshot of the key risks.

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