Recent events have placed greater emphasis on how organisations approach the subject - excessive risk taking was almost certainly to blame for the near collapse of our banking system. As a result, it has led to much introspection.

The Financial Reporting Council, for one, has been looking at the issue of risk and has added a new principle to its UK Corporate Governance Code. It states that boards are “responsible for determining the nature and extent” of the risks they are willing to take to achieve their objectives. The difficulty comes from interpreting the intricacies of the language they use and turning it into applicable action.

What is risk?

In ISO 31000, the International Organisation for Standardisation describes risk as “the effect of uncertainty on objectives”. It’s a careful effort to remove emotive language from the definition because risk can have both positive and negative effects.

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