Human Resources Risk Management

Risk measurement, per se, which is a task usually assigned to the ¿risk management (RM)¿ department, is in reality only one input to the risk management function. As Coleman elaborates, ¿Risk measurement tools. Help one to understand current and past exposures, which is a valuable and necessary undertaking but clearly not sufficient for actually managing risk.¿ However, ¿the art of RM,¿ which he notes is squarely the responsibility of senior management, ¿is not just in responding to anticipated events but in building a culture and organization that can respond to risk and withstand unanticipated events. In other words, RM is about building flexible and robust processes and organizations.¿ The recognition that RM is fundamentally about communicating risk up and managing risk from the top leads to the next level of insight. In most financial firms, different risks are managed by desks requiring very different metrics. Nonetheless, there must be a comprehensive and transparent aggregation of risks and an ability to disaggregate and drill down. It is absolutely essential that all risk takers and risk managers speak the same language in describing and understanding their risks.