Methodology – what risks does it assess?

GovernmentRisk360® is a methodology to systematically capture the range of government related risk factors at play in an Australian domestic context. Because we cannot always predict the actions of government, we instead assess a range of indicators under our six risk categories to provide a picture of our exposure. When we understand the political, regulatory, reputational, compliance, operational and opportunity uncertainty that we face through the actions or inaction of government we can appropriately deploy resources as a foundation to best manage these changes in the future.

A key driver of external uncertainty is political risk and is focused on domestic matters such as electoral cycles, government stability and other localised political events. Other risk categories include regulatory risk where a change in policy creates new conditions on operations (such as packaging or promotion restrictions) and operational risk where government decisions disrupt business inputs (such as energy policy settings) required for normal business operations. Although sometimes related, regulatory and operational risks usually manifest independently of any political risk factor and can be harder to predict without strong visibility of government policy settings or relationships with government.

While there may be relatively little opportunity to effect change or impact on these broader external risks, they can be managed through appropriate assessment and preparation for change. The areas where organisations can effect most change is through management of the internal risk categories.

Poor corporate behaviour in public can result in reputational risk which can erode an organisation’s ‘licence to operate’ and hamper an ability to engage either directly with government stakeholders or with third party stakeholders. Similarly, compliance risk is created through failure to address or enforce critical compliance criteria which could trigger an escalated government response. Finally, a significant but often overlooked risk for many organisations is opportunity risk, which manifests when there is limited organisation wide visibility of government stakeholders, relationships, institutions or policy settings which means the organisation is unable to realise opportunities that may be available.