A key responsibility of leadership is to understand an organization’s strategies and the risks that are associated with them while also ensuring the organization’s risk management practices balance the amount of risk taken with the amount of value they are expected to produce. A systematic risk management approach is essential for making certain the scarce resources are assigned to address the most critical needs. Strategy and risk are integrally related, and the success of any strategy is closely linked to an organization’s understanding and command of risk. For budgeting, operational requirements and risk levels, not the previous year’s budget, should drive budgetary decisions. By leveraging Strategic Risk Assessments (SRA), budgetary decisions for resource allocation can be made based on the comparison of priorities and potential trade-offs, consequences, and risks. SRA can be a useful tool to inform decision making as part of the strategic planning and budgeting processes.
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This article originally appeared in the Fall edition of Armed Forces Comptroller produced by the American Society of Military Comptrollers
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