The Australian Risk Policy Institute (ARPI) has released a new risk management policy which is designed to prevent, among other things, another global financial crisis, according to ARPI.

Risk management has failed globally at critical times due to a lack of risk policy to inform and guide risk management processes, which include identifying and communicating risks and options to leaders so they can make the right decision in time to prevent or manage events or crises, ARPI said.

“Today’s challenges require new thinking, new approaches and new frameworks in relation to risk management,” said ARPI patron Admiral Chris Barrie (retired).

“These reforms must be urgently implemented by governments around the world, by the global business sector and by local and international not-for-profit and communications organisations to improve the quality of decision making.”

Key features of ARPI’s risk model include: recognising and using global, local, external and internal networks as a key new source of risk identification, as well as recognising the existence of systemic risks, which may cover whole systems in society, government or business.

Other features include recognising vulnerability as another critical, new risk identification criterion, as risks may occur at different times and may be missed if time is not considered as part of vulnerability in risk identification.

Risk management must also be mandated, rather than optional or voluntary, preferably through regulation or at least a promulgated Board or Executive policy, ARPI recommended.

“It must take a performance or outcomes-based approach and include the critical issues of authorization, responsibility, recognition, disclosure, decision-making, a culture of compliance, formal reporting and both corporate and individual executive sanctions,” said ARPI in its policy.