Michael Saltzstein Explains How to Integrate Strategic Risk Management

As Michael Saltzstein notes, successful businesses must have their operations in order if they want to stay ahead. As he points out, this entails defining a viable strategy. Unfortunately, many companies miss opportunities because they ignore strategic risks, which is why strategic risk management is essential.

Strategic Risk Management (SRM)

Strategic risk management identifies risks, analyzes their potential consequences, and takes the appropriate steps to mitigate them. These internal and external risks jeopardize the company's strategy and objectives. For example, if a finance company signs a significant new client, there is an inherent risk that the company will not be able to scale quickly enough to provide the complete service that the client requires. The result is that the client may leave after a short time. However, the finance company is aware of this risk and can plan to mitigate it by hiring part-time staff or retaining existing staff and freeing up their time by driving more efficiencies, such as through automation tools.

As a focal point within enterprise risk management (ERM), strategic risk management focuses on the types of risks that will affect stakeholder value. As a result, executive-level leadership must devote time to managing and confronting this risk.

Strategic Risk Management Integration

Because strategic risk links to an organization's strategies, it would be best for companies to integrate strategic risk management into their core processes. Michael Saltzstein provides three ways to incorporate risk management with strategic planning to embed strategic risk management into the inner workings of your organization:

1. Create the strategy: Define your mission and vision and the methods you will use to assess risks.

2. Communication: Make it a point to explain why strategic risk management is in everyone's best interests to stakeholders and the internal team. You can agree to regular updates and discussions about the process's progress or gaps.

3. Align the organization: Examine current processes and procedures to ensure risk management is incorporated and addressed. Provide updates if anything is out of date or missing information.