Presented at The Institute of Internal Auditors of Thailand Annual Conference 2017 Venue: Centara Grand & Bangkok Convention Center at Central World, Bangkok, Thailand

1. AssessingStrategicRisk
AMoreActiveRolesforIA
ChaiyootChamnanlertkit
ดร.ชัยยุทธ์ ชํานาญเลิศกิจ
ดุษฎีบัณฑิต สาขาพัฒนาธรรมาภิบาล
อดีตรองกรรมการผู้อํานวยการ สถาบันกองทุนเพื่อพัฒนาตลาดทุน ตลาดหลักทรัพย์แห่งประเทศไทย
ที่ปรึกษาอิสระ ทริส คอร์ปอเรชั่น, ไนส์คอร์ป
chaiyoot.nise@gmail.com | Mobile: 081-837-3933
The Institute of Internal Auditors of Thailand Annual Conference 2017
2 October 2017 | Centara Grand & Bangkok Convention Center at Central World

2. Good Governance Dilemma
CREDIT: https://www.slideshare.net/DocYener/introduction‐to‐corporate‐governance‐sep‐17‐2011
ConflictofInterests
TheHeartofthematterinCorporateGovernance.
“ThePrincipal-AgentTheory”
TheBoardisResponsibleforResolving
“ConflictofInterests”issuesbetweenshareholdersandmanagers.

3. VUCAWhenWorldsCollide
CreativeDisruption
Economy of Speed
NoSafeHarbor
21st Century: The River of No Return!

4. CREDIT: https://www.yamaha.com/en/csr/governance/corporate_governance/
Why Every Company Needs a Board of Directors?

5. Market
Risks
Operations Risks
Finance
Risks
Human
Capital
Risks
IT
Risks
Legal
Risks
Supply
Chain
Risks
“Silo” or “Stove-pipe” Risk Management
Why Does ERM Fail So Often?
CREDIT: https://iaonline.theiia.org/blogs/marks/2016/Pages/Why‐does‐ERM‐fail‐so‐often.aspx

6. CREDIT: https://blog.nacdonline.org/2017/01/8‐risk‐oversight‐practices‐in‐2017/
Board Oversight is Critical to ERM Effectiveness
WhatisStrategicRisk?
Strategicrisksarerisksthataffectorarecreated
byanorganization’sbusinessstrategyand
strategicobjectives.

7. Why Board Needs Independent Advices on Strategic Risk?
CREDIT: https://na.theiia.org/standards‐guidance/Public%20Documents/PP%20The%20Three%20Lines%20of%20Defense%20in%20Effective%20Risk%20Management%20and%20Control.pdf
NoConflictofInterest
CheckedandBalance
Leadership
Independentmeans
‘independent ofmanagementandfreefromanybusinessorotherrelationshipwiththe
companywhichcouldmateriallyinterferewiththeexerciseoftheirindependentjudgement.’
HowInternalAuditadds
valuetostrategicrisk
assessmentas ThirdEyes?
StrategyExpert?
DomainExpert?
SubjectMatterExpert?

8. Internal Auditor Provides Third-Eye View
CREDIT: https://na.theiia.org/standards‐guidance/Pages/New‐IPPF.aspx
Attribute Standards
1000 Purpose,Authority,andResponsibility
1010 Recognition ofthe DefinitionofIA,the
CodeofEthics,&StandardsinIACharter
1100 Independence andObjectivity
1110 Organizational Independence
1111 DirectInteraction withthe Board
1120 IndividualObjectivity
1130 ImpairmentstoIndependence or
Objectivity
1200 ProficiencyandDueProfessionalCare
1210 Proficiency
1220 DueProfessionalCare
1230 ContinuingProfessionalDevelopment
1300 QualityAssuranceandImprovement
Program
1310 Requirements ofthe QualityAssurance
andImprovement Program
1311 InternalAssessments
1312 External Assessments
1320 Reportingonthe QualityAssuranceand
Improvement Program
1321 Useof"ConformswiththeInternational
StandardsforProfessionalPracticeofIA"
1322 DisclosureofNonconformance

9. Enhancing the Strategic Value of Internal Audit
CREDIT: https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/02/enhancing‐the‐strategic‐value‐of‐internal‐audit.pdf
StrategicRiskAssessment
Isapowerfulcompliment
toEnterpriseRisk
Management.ERMis
appliedfromstrategy
throughexecution,while
relyingoninternal
controlatcritical
junctures.Thetwoare
interconnected,butnot
interchangeable.

10. Enterprise Risk Management as an Ecosystem
Legal&RegulationRisks
ComplianceRisks
HumanResourceRisks
MoralHazards
SafeHarbor?2017, CChaiyoot

11. Traditional Way to Assessing Strategic Risk
Strategic Planning Process
CREDIT: http://www.borsaitaliana.it/borsaitaliana/pubblicazioni/pubblicazioni/strategicplanguide.en.pdf

12. Quantitative Way to Assessing Strategic Risk
SOAR Strategic Objective At Risk
CREDIT: Gregory Monahan (2008), “Enterprise Risk Management: A Methodology for Achieving Strategic Objectives”

13. CREDIT: https://www.slideshare.net/nilsmorkulnes/data‐vs‐hunch‐lecture‐at‐hyper‐island‐2015
The Essence of Strategy is
Choosing What Not to Do
MichaelPorter
Mostofthetimetherewillbe
multipleinsightsthatcanbe
drawnfromthedata.Strategyis
allaboutchoosingthepaththatis
mostlikelytofulfillyourgoal,with
theresourcesyouhaveavailable.
That’sdifferentfromchoosingthe
mostinterestinginsight.

14. AWaytheOrganizationwasStructuredand
OperatedbasedonStrategicDecisions(Choices)
thatwillbeformalandinformal.
TwoExtremeSituation
Strategic
Intents
[Objectives]
Strategic
Options
[Alternative]
Strategic
Assessment
[Context]
=StrategicChoices
Strategic Choice Theory: A Tool for Assessing Strategic Risk
2017, CChaiyoot
Strategydominatedby
preferenceofkeypersons.No
teamthinking.
Toomuchanalysismaycaused
paralysis.Howeverwemayprefer
thisapproachasitwill conduceto
duecare.

15. Applying Strategic Choice Theory to Assess Risks
5
4
3
2
1
0
Strategic
Intents
Strategic
Options
Strategic
Assessment
AstheThirdEye,IAdon’tneedto
redowhatmanagementandrisk
complianceteamalreadydo.
IAneedasystematicapproachto
exploretheprocessandoutcomeof
corporatestrategicplanningto
identifystrategicrisksthatare
relevantandsignificant.
2017, CChaiyoot

16. Extending the Strategic Choice Theory
Strategic
Vision
Strategic
Execution
Strategic
Choices
ToaddmorevalueforBoardRisk
Oversight,theassessmentcango
beyondStrategicChoiceTheoryby
assessingthealignmentofStrategic
Vision-Choices-Execution.This
frameworkcanexplainthecorporate
strategicplanningecosysteminwhole.
2017, CChaiyoot

17. Key Takeaway
• Role of IA, as designated in attribute of independent and objectivity,
can be the Third Eye who give systematic & systemic analysis for
Board Risk Oversight which would be necessity to enhance the
effectiveness.
• Though this require a lot of experiences, but it’s very important to
just start now. We can accelerate the skill improvement by using of
outside independent advisers (Third Eye).
• The better the Board Risk Oversight perform, the more effective
Enterprise Risk Management will be.
Becoming A Good Independent Risk Analysts