Often I receive questions concerning interdependencies between strategy and risk management. There is no general answer but at the end of the day we have to accept that our strategic decisions (as well those measures without a decision) have an impact on the firm’s risk situation.
For banks in Europe it has become a little bit easier: Due to the supervision requirements (occurring from the Minimum requirements on risk management (in Germany the so called “MaRisk”) some general criterias for a procedure model of the strategic planning process can already be derived:
- The strategic initial position of the credit institution has to be analyzed.
- The risk load-capacity, the organizational structure as well as the qualitative and quantitative dimension of the business of the credit institution must be taken into account. In the context of a risk load-capacity’s assessment the strategic and operational risks must be analyzed and judged.
- The implementation of the strategy must be guaranteed.
I going to discuss this a little bit more in detail in the future.