I need Chief Risk Officer and/or Risk Manager?

This is tough.. I'm a risk manager. I may not be in that position literally but a risk manager nonetheless.

I was in one of the LinkedIn Risk Management's discussions on risk management and many have fairly different opinion of things surrounding risk management and of course, the person who does all the work and strategic thinking ( I hope so) for the organisation.

It's kind of like... if you have to compare, where would you put CRO in the comparison chart? next to Audit Manager? Your Director? CFO? How important do you think the portfolio is?

If it were to have been blessed with a series of titles such as CPA, CIA, CFA, etc, I would say you would. But how about this, none of that but the person is darn good at what he does..

So, again, not many organisation in Malaysia would have a CRO, a truly truly CRO. Some are spurred from an accountant with knowledge and experience on VAR, Risk, Credit Risk, Compliance, etc etc.. some are from being an auditor to risk because of the risk-based auditing that a person was concentrating on ... some are trained risk managers...

Now, do I need them? Can't my compliance officer just do what the Basil Accord asked us to do? Can't we just rely on audit report to work out those weaknesses and gaps? Can't I just use my Board to ensure the oversight on risk as well as the rest of the operations?

It is entirely up to you, your perception, your business thoughts, your money and your time and effort. It is all about capacity building. You already have the warm bodies that you need, CFO, CPA, CIA, COO, CEO, MD, etc.. ask yourself, in this uncertainties, would you risk it? Even if you are covered by provisions that CFO made, are you satisfied? You may, once you see the audit findings of your CIA or CFA.. then what? BCP? BCM? Who is going to take care of that? your CIO?

Again, the sky is the limit, especially when it involved your entire business universe. Meaning, you shape it with an end in mind. What do you want your business me in the market share map?

What would it be..

What would it be if I want to train people on risk management? What would be the module or the textbook needed?

I was asked these questions yesterday and it got me thinking. Can one teach risk management when it is part and parcel of an intellectually sound people of the corporate world? Can you get them to do the whole cycle to derive a predictive profile of what ifs and incidents management?

I wonder. But I did responded by giving my friend's website for him to start digging into what would be the modules needed. My friend is teaching exactly that, how to become risk manager.

I am one of his ex-student. But I had been in risk before I even met him.

I can only say this. Go for the certification and pass it with flying colors. Understands it and you will be able to come up with an outline of the module depending on the target audience, purpose and end goals.

I am not saying I didn't want to help, it was just that whether he is able to do exactly what it is written. Understanding may differ and the real meaning may sway from its original intention.

I do not want that to happen to him as it has with the rest. I hope that he is able to find what he was looking for. One shall seek and seek and only to find it right under one's nose.

Risk in the face of Malaysia...

Risk Management has been in Malaysia for quite a decent amount of years. However, how much mature it is, still a doubtful percentage. If you isolate risk phenomenon only to the likes of Insurance related and financial institutions, then you have definitely hit the nail.

When people hear that you are doing risk management, they would say, hey, so you work in the insurance or which bank? These questions or lack of it, is normal in this country because of where it is concentrated in. You would not be able to imagine if ever any Malaysian company has any risk management installed. MNC, yes, might be, or shall we say, it could be outsourced.

I am not saying that this is bad, rather I'm pointing out that even if there is such order or decree that thy shall have a CRO, would companies say "I follow"? Doubtfully so. Except if you have been directed to do and/or formalise what you have currently that seems to be but unlikely a risk management setup.

Moment of truth behold when you are not sure which framework to follow. I'm telling you, there are quite a few. Each maybe common but quite unique and served different appetite of an organisation as well as its setup.

I am quite familiar with consultants be it individuals or companies, that offered outsource services in not only audit but also risk management. Even right to the extend of a set of Risk Management Committee. Whether this is cost-effective or not, for me, it is what we call MONTHLY INCOME. Do not get me wrong, this is not a sin or illegal. In fact, in Malaysia, it is doable. As long as you have the credentials and confidence to convince your clients.

Thus far, Risk Management and the warm bodies professionals are surviving. More and more, they are being sought after. But of course, I have set my vision and goals towards a different path, however the value that I carry day in day out, is still of use.


In fact, I impart them to those who are currently handling the task of setting up, developing and enhancing. I hoped that ERM would become a proper name, CRO would be the preferred caretaker of ERM and RMC would be able to play the oversight better and impart their knowledge and expertise to create more proteges.

2012!! What Risk & Opportunity are we looking at?

Hi Folks!

I know it has been awhile. A long absence! I hoped it made your heart grew fonder. Of the Risk silly!.. not mua, the author.

I have been approached to take up the position of assisting a Senior Manager of a well known Insurance company. I was planning to expel my knowledge, experiences, theories, hypothesis, deductions, well, basically everything that I have and more to see whether what I have acquired 6 years ago are truly dispensible to an organisation, to its employees (warm bodies) and receive the recognition of the Risk Culture and Framework.

Since they are in the verge of finalising a framework, I was keen but would preferred to have a look at the said draft before I can say "I Do". Hey, this IS a marriage proposal! A form that says, once you are in, you have to sign some form of legal document to get out. hehehe!!

Some how or rather, another interesting meteor was heading my way as well and like the movie, Mega Mind, the orb just crashed on me! Shoot! it doesn't make me have agreen glow and became a gigantia but more or less, made me a tremendous lucrative offer. Oh yes, I do look at the value of my service, however, it is still way lower than the market rate of a certified professional.

I'm not trying to be a snob but rather, seeking an opportunity that would enhance not only of my intellect and experience but also my financial standing. Won't you agree? :-)

The UK has loads for me, however I am not mad or loco enough to make that change. I would if I could pack up three precious lively bundle of misfits with me! hehehe

Thus, because of the many factors (can be termed as risks too) supersede the opportunity opened to me, I'd settled with something, in my personal opinion present a far more greater challenge.. which is to stay and make something out of it.

Today, I would say, changing the course of my career does not suppressed my desire to continue my Risk Management Practice. I am what I am. I would say, converting the elements into another may produce substantial results. I'm sure where I am now, are pushing the new change to suffice and overwhelm my surrounding.

I would love to see changes materialised, people motivated and challenged again. I am not sure where this course would take me, however, the pace, the path and the direction has been set and coordinated. In risk and opportunity, the only way to move is forward.

2012, we are looking at more rain than the sun. More trouble than fortune. More problems than solution. One thing that would remain constant is hard work, smart thinking. Change.

I bid you a good day. (^_^)

Risk: Psychological hurdles

I was on the train when my blackberry sounded. An email from one of my favorite sites. I do agree of what the author was saying and I think that is the hardest part for not only policymakers but also the rest of us.

Fukushima double dose of disaster has been the most alarming event for today's news. Nuclear reactors being on a state of instability, spell capital "D"s all over!

Objectively of course it would get us, or this case countries with similar setup or plan to would have their blue print readjusted and recalculated to ensure that these structure can withstand the seismic wave. Beefing up the preparedness test is easy but really going through them when the time comes...well, that would be venturing into subjective zone.

I'm saying this because infrastructure can be in placed, the best and latest systems and procedures, even people for that matter, can be trained. The hardest and most importantly, psychologically, are we really prepared?

Can you actually overcome the psychological hurdles. You don't have to wait for these type of disasters. Any kind of disasters can be devastating to not only to the body but to the soul.

Financial crisis, inflation, unemployment, homeless. Have we prepared ourselves on the most fundamental of them all. These are real problems, issues if you may, but compared to those people in Japan... I would say these are just nothing in comparison. And yet, you can see people couldn't even go beyond these easy-pizzy hurdles.

Many would say, hey, what's that got to do with risk? Yes, maybe you are right. It may not be related. But the problem is, the risk would also be there, lurking and waiting and wanting to happen. Remember, once a risk materialized, its no more a risk but an incident. Hence, what we should look at the scenario of, IF it ever did happen, am I ready to face them? Don't wait for a natural disaster to happen before you decides to prepare yourself. Do it from now on.

No risk, no gain.
No pain, no gain.

By the way, it's Harry Houdini's 137th Birthday today.

Sweet Balls of Fire...

2011 has just began with us being on the 6th day of the first month, January, of the year 2011. Year of the Rabbit. Not to worry, I will not turn into a fortune teller here after. :-)

The are things that we have taken for granted. Things such as financial stability, stable footings, guaranteed income, lifetime partners or your other halves (family business included) and not to forget ever loyal minions. Yes, minion is not a bad word, perhaps is misunderstood to be a downgrading word because you might hear it a lot in movies and cartoons. Fairy tales, to be precise. Its actually a good word.

As the dictionary would say:
1. a servile follower or subordinate of a person in power.
2. a favored or highly regarded person.
3. a minor official.

January being here is a good start for that review on your risk management risk register and all. Of course you might want to enjoy just a little of the new year but work is never done for this little ball of fire.

Start with what are the uncertainties that are looming over your company and industry at large. Is the Economic Transformation Programme (ETP) helps to ease your worries of the potential/predicted/expected comings or goings in year 2011?

Are you minions ready to face the ups and downs along the journey?

By the way, what's the bonus payout like last year?

Next is to start planning for the year and mapped your milestones however small it is. It is a start and procrastinating will only get you behind schedule or worst off, behind your competitors.

Second next to-do things in your list, audits. Get everything straighten out before March comes.

Third, KPIs. Set them up and aligned with your corporate long term and short term goals... that is, if you have any.. and make it as realistic as possible to avoid any shattered dreams.

Forth, compensate, appreciate and celebrate last years victories and hard work so that you create an environment of self-motivated atmosphere. Love is in the air so to speak..

Lastly, don't forget to check and recheck your own personal goals and be on top of things... a proper dashboard might do the trick and make sure you know how to use one. It really pains the creator when you only complement the colour scheme and not the information it represents.

I know! I heard from Astro Boy movie that nobody likes a know-it-all person but someone has to be one right? Its a dirty job but someones got to do it.

Top 10 Reasons Small Businesses Fail

You might be wondering the relevancy of the above. This is a classic example of risk management practices gone wrong or shall we say lack of it. Actions before thoughts. Grabbing opportunities but failing instead.

The New York Times - JAY GOLTZ, On Wednesday January 5, 2011, 2:05 pm EST

One of the least understood aspects of entrepreneurship is why small businesses fail, and there's a simple reason for the confusion: Most of the evidence comes from the entrepreneurs themselves.

I have had a close-up view of numerous business failures -- including a few start-ups of my own. And from my observation, the reasons for failure cited by the owners are frequently off-point, which kind of makes sense when you think about it. If the owners really knew what they were doing wrong, they might have been able to fix the problem. Often, it's simply a matter of denial or of not knowing what you don't know.

In many cases, the customers -- or, I should say, ex-customers -- have a better understanding than the owners of what wasn't working. The usual suspects that the owners tend to blame are the bank, the government, or the idiot partner. Rarely does the owner's finger point at the owner. Of course, there are cases where something out of the owner's control has gone terribly wrong, but I have found those instances to be in the minority. What follows -- based on my own experiences and observations -- are my top 10 reasons small businesses fail. The list is not pretty, it is not simple, and it does not contain any of those usual suspects (although they might come in at Nos. 11, 12 and 13).

1. The math just doesn't work. There is not enough demand for the product or service at a price that will produce a profit for the company. This, for example, would include a start-up trying to compete against Best Buy and its economies of scale.

2. Owners who cannot get out of their own way. They may be stubborn, risk adverse, conflict adverse -- meaning they need to be liked by everyone (even employees and vendors who can't do their jobs). They may be perfectionist, greedy, self-righteous, paranoid, indignant, or insecure. You get the idea. Sometimes, you can even tell these owners the problem, and they will recognize that you are right -- but continue to make the same mistakes over and over.

3. Out-of-control growth. This one might be the saddest of all reasons for failure -- a successful business that is ruined by over-expansion. This would include moving into markets that are not as profitable, experiencing growing pains that damage the business, or borrowing too much money in an attempt to keep growth at a particular rate. Sometimes less is more.

4. Poor accounting. You cannot be in control of a business if you don't know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common -- and disastrous -- misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the chief financial officer, one of the many hats an entrepreneur has to wear until a real one is hired.

5. Lack of a cash cushion. If we have learned anything from this recession (I know it's "over" but my customers don't seem to have gotten the memo), it's that business is cyclical and that bad things can and will happen over time -- the loss of an important customer or critical employee, the arrival of a new competitor, the filing of a lawsuit. These things can all stress the finances of a company. If that company is already out of cash (and borrowing potential), it may not be able to recover.

6. Operational mediocrity. I have never met a business owner who described his or her operation as mediocre. But we can't all be above average. Repeat and referral business is critical for most businesses, as is some degree of marketing (depending on the business).

7. Operational inefficiencies. Paying too much for rent, labor, and materials. Now more than ever, the lean companies are at an advantage. Not having the tenacity or stomach to negotiate terms that are reflective of today's economy may leave a company uncompetitive.

8. Dysfunctional management. Lack of focus, vision, planning, standards and everything else that goes into good management. Throw fighting partners or unhappy relatives into the mix, and you have a disaster.

9. The lack of a succession plan. We're talking nepotism, power struggles, significant players being replaced by people who are in over their heads -- all reasons many family businesses do not make it to the next generation.

10. A declining market. Book stores, music stores, printing businesses and many others are dealing with changes in technology, consumer demand, and competition from huge companies with more buying power and advertising dollars.

In life, you may have forgiving friends and relatives, but entrepreneurship is rarely forgiving. Eventually, everything shows up in the soup. If people don't like the soup, employees stop working for you, and customers stop doing business with you. And that is why businesses fail.

Jay Goltz owns five small businesses in Chicago.