It is often said that the benefits of Risk Management are intangible. No argument here. It's tough to say "You were successful because I helped you manage your risk" when you are talking to an already successful CEO. How then do you demonstrate the benefits of Risk Management? One approach is around the concept of Intellectual Capital.

When we talk about the value of a business, we talk about book value and market value. The difference between book and market value is often described as the intangible asset value or the value that the intellectual capital within the organisation brings to the table.

What does intellectual capital have to do with Risk Management? Risk Management enhances intellectual capital because its main role is as a knowledge enabler. Risk Management enhances the knowledge of people within the organisation and based on the principle that the sum is greater than the whole, it enhances the sum of all knowledge in the organisation.

     

  • Risk Management enhances the knowledge of the keepers of the real assets such as cash, property, plant and equipment so that these are better protected and better conditioned to withstand impacts and take advantage of opportunities.
     

  • Risk Management enhances the knowledge of keepers of other assets of the organisation such as key processes and systems to ensure they too can withstand impacts and take advantage of opportunities.
     

  • Risk Management also enhances the fundamentally most important asset of an organisation, its culture. Risk Management helps drive people's behaviour towards better decision making.

 
 
If you can work on your sales pitch to executives around these concepts you will be even better placed to sell the intangible!

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