WOLF & CO Insights 3 Steps to Optimized Risk Management

3 Steps to Optimized Risk Management

Implementing a robust risk management program is crucial to the success of your institution. An effective enterprise risk management (ERM) program will allow you to monitor threats across your institution, understand where threats are evolving, and efficiently communicate the status of your risk initiatives to your Board and Examiners. We’ve developed a breakdown of the three most important components needed to build an effective risk management strategy.

1. Define Your Risk Appetite

Your risk appetite is the amount and type of risk your institution is willing to take to successfully complete strategic objectives. Understanding your risk appetite has a crucial impact on how your institution can safely adapt and grow. Define your risk appetite by considering the skills and resources necessary to manage risks, and identify Key Risk Indicators (KRIs) that need to be monitored. Your risk appetite should be reviewed regularly to account for changing industry conditions and internal organizational changes.

2. Communicate Risk Effectively

Learning how to engage your Board is essential to a strong ERM program. During these presentations, there’s an extensive amount of information to report, and crucial points can sometimes be overshadowed by less-pressing data. To better manage these conversations, an agenda should be set prior to the meeting. A risk manager can harness an agenda to ensure areas with the highest importance are acknowledged and communicated, which will foster buy-in from your Board.

3. Build a Proactive Risk Culture

Regulations are constantly changing, and this volatility emphasizes the need for an agile ERM program that can quickly respond and adapt to these variations. Risks in your environment are also ever-changing, and institutions should develop a flexible risk management framework to mitigate emerging risks before they become larger threats.


To successfully manage risk, you must develop holistic processes focused on identifying threats and implementing substantial risk-mitigating practices. By defining your risk appetite, effectively communicating risk, and encouraging a proactive risk culture, your institution will build a comprehensive ERM program for optimized security and growth.