Reporting risk to the board is essential to help directors understand risks, the impact, and what is being done about them. But it is not a clear-cut activity. What to report and when to report it can vary widely according to strategic goals, operational conditions, cultural values.

While some proxy statements include promises that senior management will update directors about risks, most organizations don’t have formal protocols for reporting risks to the board. It’s up to the C-suite and others to decide when to escalate risks to the top – which isn’t necessarily a bad thing as long as directors are clear on the type of risks about which they expect to be notified.

Tell Your Risk Story

How you report on risk matters. As boards of directors become more involved in enterprise risk management as a strategic tool, it’s increasingly important to present risks in a meaningful manner to support better decision making at the top. Reports that are too detailed, that don’t focus on the issues that matter to the board, or that aren’t actionable will fall on deaf ears.

Here are three tips for pulling risk data together into a cohesive narrative that will give the board what it wants, while telling the story you need.

  1. Focus on the dominos that will fall. Risks don’t stand alone, and neither should risk data. One unmitigated risk can trigger a cascade of impacts that reverberate throughout the organization. The board needs to see the full picture of how one risk affects the next to holistically prioritize action and solve problems. It’s tough to track these interrelationships, however, if your critical risk information is locked away in disparate spreadsheets or different departments. You might even inadvertently increase risk by missing important connections that are invisible from a silo. Today’s risk management software consolidates risk data across the enterprise. It surfaces relevant information from wherever it’s hiding, connects it with other internal and external data, and normalize the data so it’s all relatable, accurate, and actionable.
  2. Turn your risk data into a picture. You probably have reams of risk data supporting every point you are trying to make. The board, however, is in the business of making decisions, not amassing facts. They don’t have the time or the inclination to digest thousands of data points before making a decision. You need to do that for them. Today’s risk management software can turn those thousands of data points into powerful, real-time visuals that add context and convey facts more effectively words or spreadsheets ever could. You can easily roll up detail into comprehensive enterprise-level reports – and drill down into the details if there are specific questions. All it takes are a few clicks to get the answers they need.
  3. Speak with the board, not at the board. The best presentations are conversations. If you want to make an impact in the boardroom, engage board members in a dialogue. Don’t just spout off facts about risk criteria, risk assessments, or key risks. Think about what the board is concerned about – and frame your risk story accordingly. Risk management software can help you speak in a language familiar to your audience – like the financial impact of risk and likely damage. Software gives you the ability to serve up actionable, high-level information and make recommendations for action. This can inspire the kind of constructive discussion that leads to confident decisions.

Out-of-date tools equal inadequate analysis

If you don’t have the right software tools, reporting risk to the board can be a real challenge. The ever-popular spreadsheets simply cannot provide the level of analysis or insight demanded by boards. Boards are charged with making critical decisions to steer the company forward. And they can’t make the best decisions if all they have is outdated, incomplete, or inaccurate risk data.

Spreadsheets cannot aggregate costs and interdependencies of risks, nor can they drill-down on objects and show additional, related information. And most critical, spreadsheets don’t help the board understand the relationships between risks, the potential impact on strategy, or what actions to take now to keep the organization on course.

The pressure is on when reporting risk to your board of directors. You only have a few minutes to present a clear and convincing picture of the significant risks to the company’s objectives. Risk management software can make your job easier by instantly giving leaders reliable, accurate, and complete information, so they can confidently make decisions about risk and opportunity.

For more on managing risk at an enterprise level, download our ebook, Charting a Course for Enterprise Risk Management, and check out Riskonnect’s ERM software solution.