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Integrating enterprise risk management and risk intelligence to drive better decisions

This is an excerpt from Contemporary Leadership in Sport Organizations 3rd Edition by David Scott,Mark LaSota.

Mastering Risk in Sport Organizations—A Leadership Imperative

This section has been added in the 3rd edition of this book as a broad overview of the interrelationship between complexity, strategic organizational leadership, and enterprise risk management (ERM) in modern sport organizations. The Risk and Insurance Management Society (RIMS) (2011) looks at ERM holistically and broadly defines it as a strategic business discipline that supports the achievement of an organization’s objectives by addressing the full spectrum of its risks and managing the combined impact of those risks as an interrelated risk portfolio. Several descriptions and references to ERM in the literature point out that it is a responsibility of organizational leaders and that it emphasizes understanding, planning for, and addressing the strategic, financial, operational, legal, reputational, and even catastrophic impacts of various risks. A key point to remember is that enterprise level decision making and problem solving directly influence overall organizational and operational resilience, which generally refers to the ability to anticipate, prepare for, respond to, and recover from disruptions while maintaining delivery of critical products or services (FCA 2017). In order to be effective in complex and challenging situations, individuals in leadership roles and their leadership teams must be able to quickly adapt to internal and external pressures, work to ensure minimal disruption, and reinforce a culture of adaptability and continuous improvement. An excellent example of an overall effective approach to ERM and operational resilience in the sport industry was the NBA’s rapid formation of the Disney Bubble in response to the disruption of the COVID-19 pandemic.

ERM and Risk Intelligence

Increasing in importance for leaders, and related to ERM in modern organizations, is knowledge and application of “risk intelligence.” This concept originated in the 1980s, but has evolved to now involve a refined ability to interpret and navigate risks and their potential consequences as well as opportunities that may emerge from disruptions in an organization. According to Sheth and Sinfield (2023), in a MIT Sloan Review article, risk intelligence is a skill that enables leaders to navigate complex environments by systematically identifying and categorizing risks, sensing and monitoring changes and disruptions, and more openly embracing uncertainty rather than avoiding it. As pointed out by Sheth and Sinfield, leaders can enhance risk intelligence and overall resilience in their organizations by effectively categorizing and analyzing potential risks and their implications as well as developing comprehensive networks across the organization to better identify, understand, and manage risks. It is important to note that processes associated with the application of risk intelligence in modern organizations often involve extensive data evaluation and emerging use of AI tools to assist in assessment and analysis. A thematic review within ERM literature revealed a number of common risk types. Table 6.1 includes an overview of several of these risks that need to be considered in a risk intelligence and resilience plan for sport organizations. Also, see the On the Sidelines sidebar for several examples of risk intelligence and AI applications in the sport industry.

More Excerpts From Contemporary Leadership in Sport Organizations 3rd Edition

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