Why Risk Assessment Matters in Business

What would you do if your business's financial health depended on the weather? That’s not just a hypothetical. Increasingly, climate risks are reshaping how lenders assess the creditworthiness of businesses. Here’s why that matters and what it could mean for your bottom line. Let’s start with a simple truth: Not all loans are created equal. Loans backed by physical assets like commercial real estate tend to have higher recovery rates in case of default. Why? Because there’s a tangible asset something with value to recover, compare that to unsecured loans, where lenders are often left empty-handed if things go south. Now, Layer climate risk onto this equation. Imagine A factory located in a region prone to floods or hurricanes. The more vulnerable the location, the greater the risk that the physical asset could be damaged or even wiped out by extreme weather. That could significantly lower the recovery rate for lenders, turning what might have been a manageable risk into a major financial headache. This is where ESG (Environmental, Social, and Governance) maturity comes into play. Companies with robust climate risk strategies those proactively safeguarding their operations and assets are better positioned to weather the storm. But here’s the kicker: those that aren’t? They might face higher borrowing costs or even find themselves cut off from certain financial institutions altogether. According to the Global Risk Report 2024, climate-related risks are now among the top global risks over the next decade. And in finance, these risks translate directly into higher LGD (Loss Given Default) estimates. For borrowers, this means two things: 1) You’ll pay more to access capital if your ESG profile isn’t up to scratch, 2) You might need to rethink your climate strategy not just for the planet, but for your financial survival. From my perspective, this isn’t just about risk mitigation. It’s about staying competitive in an evolving market. Financial institutions are becoming more selective, and businesses need to adapt. By improving ESG maturity, companies can not only secure better loan terms but also position themselves as resilient players in a world where climate risk is no longer a distant threat but a present reality. The bottom line? Climate risk isn’t just an environmental issue it’s a business issue. And how you respond could make all the difference. What steps is your business taking to adapt to this new financial landscape? Let’s discuss this in the comments. ⬇️

Stop doing risk assessments no one reads. You already have to do one every year—why not make it useful? Most assessments get buried because they’re qualitative, vague, and disconnected from the decisions that actually matter. Here’s the fix: → Upgrade to a semi-quantitative assessment that clearly shows what’s most likely to go wrong—and what it would cost. → Then take your top 3–5 material risks and run a simple quantitative analysis. Think: loss expectancy, downtime thresholds, incident response costs. You don’t need a math degree. You just need better structure, tighter inputs, and a little courage to stop playing the compliance game. Because when done right, that same assessment suddenly becomes: - A tool for executive reporting - A foundation for budget justification - A forcing function for business alignment Risk assessments shouldn’t sit on a shelf. They should drive action.

IMHO the role of risk assessments can’t be overstated. Yet, why are we doing them to simply tick-the-box? Treating a risk assessment as an annual check-a-box exercise undermines the strategic value these assessments are meant to provide. What’s the real cost of checking box risk assessments? …Risk assessments performed merely to fulfill compliance requirements completely miss the mark on several fronts. …First, they overlook specific, nuanced threats unique to an organization's operations, leaving critical vulnerabilities missed & unaddressed. …Second, they generate gigantic reports that, while perhaps impressive to look at, lack practical, implementable insights. From my experience… ->this not only wastes resources, but also creates a false sense of security that can be more dangerous than recognized vulnerabilities. Consider the business value of depth over breadth- The heart of effective risk management lies in its ability to inform the business and guide strategic decision-making, prioritizing resources where they're needed most to protect against threats with the most significant potential BUSINESS impact. Check-the-box annual risk assessments provide a shallow overview that lacks the depth necessary for actionable & informed decision-making. …BUT risk assessments that focus on critical business functions/processes uncover invaluable insights into ->how security spend aligns with business objectives, And drives growth, innovation, velocity, and competitive advantage. As leaders, we must advocate for and implement risk assessment practices that move beyond the checkbox mentality. This means-> ->Aligning with BUSINESS goals ->Prioritizing actionable outcomes ->Engaging stakeholders So, the next time you are asked to perform a risk assessment… Ask yourself, will the results of the risk assessment provide BUSINESS value? #ciso #riskmanagement #cybersecurity #businessvalue

Boards Want Risk-Based CISOs—But What About the Security Team? In the military, we had a saying: "Evolve or die." No battle plan survives first contact with the enemy—and cybersecurity is no different. For years, maturity-based cybersecurity programs have helped organizations define structure and measure progress. But today, boards don’t ask about maturity—they ask about risk. ❓ What’s our financial exposure if we suffer a cyber incident? ❓ Which critical business services are at risk? ❓ Are security investments aligned with business impact? If CISOs can’t quantify cyber risk in business terms, they’ll struggle to secure funding and executive support. Boards want risk-based CISOs, not checklist-driven ones. But this shift isn’t just about CISOs—it’s about every IT and Security practitioner. ✅ Do you understand how the systems you manage support core business functions? ✅ Can you communicate risk in business impact, not just vulnerabilities? ✅ Are security efforts prioritized based on business-critical operations? Here’s why this matters: I once sat in a risk meeting where Finance, Operations, and IT were each asked, “What’s your biggest risk?” Each had separate answers, tracked in siloed risk registers, but no one had the full picture. I told them: “There is no such thing as just cyber risk. Cyber risk is business risk.” 👉 If ransomware stalls production, it’s not just an IT crisis—it’s an operational crisis. 👉 If a cyber event disrupts invoicing, it’s not just a technical problem—it’s a financial one. Without a unified risk approach, recovery will be just as fragmented. That’s why Integrated Enterprise Risk Management (IERM) is essential—it ensures business leaders work together to assess, prioritize, and mitigate risks collectively. Next week, I’ll share the next article in my series, outlining a practical framework for shifting from cybersecurity maturity to true risk-based security. Are you seeing this shift in your organization? For IT and security teams—how does this shift impact your work? Let’s discuss in the comments, I appreciate your insights!

Risk management decisions are often overlooked until a crisis forces action. These decisions focus on protecting financial stability and long-term growth. Some key considerations: ✅ Are there enough cash reserves to handle unexpected downturns? ✅ Is the business taking on a manageable level of debt? ✅ Are key suppliers and customers diversified to avoid over-reliance on a single entity? Ignoring risk does not eliminate it. A structured approach ensures the business remains resilient under changing conditions. What risk management decisions should be addressed now?