What is the role of governance in risk management?

Governance plays a crucial role in risk management by establishing a framework that guides how risks are identified, assessed, and managed within an organization. Specifically, it involves creating and maintaining policies and procedures that set the strategic direction for risk management practices. This framework ensures that all activities related to risk are aligned with the organization’s objectives and compliance requirements. By defining the roles, responsibilities, and accountability structures for managing risk, governance helps to ensure that risks are systematically addressed and monitored across the organization.

In contrast to the other roles listed, governance is not primarily focused on the implementation of tactical operations, managing day-to-day tasks, or enforcing specific technical measures. Instead, it lays down the foundational principles and guidelines that inform those operational activities. This overarching function ensures a consistent approach to risk management, fostering a culture of accountability and awareness throughout the organization.