In many organisations strategy and risk management are treated as parallel tracks – developed in isolation, reviewed at different times, and owned by different teams. Strategy is seen as visionary and aspirational, risk management, as protective and reactive. This siloed thinking prevents organisations from making the bold moves necessary for meaningful growth.
At Tykee Advisory, we believe strategy and risk are not separate streams of work but are two tools to achieve the organisations objectives. When they are developed together alongside a well understood risk appetite, organisations are better placed to achieve their objectives.
Strategy Should Embrace Risk – Not Avoid It
It’s a common perception that good strategy avoids or minimises risk. In reality, the opposite is true. A strong strategy acknowledges uncertainty and deliberately charts a path through it. It involves bold choices – what opportunities to focus on, where to invest, where you can push the boundaries and where you need to step back. Every decision carries inherent risk including the decision to do nothing at all. Eliminating risk doesn’t make strategy better. It makes it safer, smaller and ultimately, less valuable.
To be effective, strategy must be developed with a risk and opportunity mindset. That means asking questions like:
- What assumptions are we relying on, and how stable are they?
- Where are the emerging opportunities and what risks do they expose us to?
- What could prevent us from achieving our objectives?
But beyond simply identifying risks, the organisation needs to also define what level of risk it is willing to accept in pursuit of its goals. This is where risk appetite becomes critical.
If your appetite for risk doesn’t match your strategic ambition, you’ll struggle to deliver on your objectives. You can’t aim to double market share or enter new regions if you’re unwilling to accept the financial, operational or reputational risks that come with that growth. Misalignment here leads to stalled initiatives, missed opportunities, capital inefficiency and frustrated teams.
The best strategies are both bold and grounded. They aim high within the boundaries of a clearly understood and agreed-upon risk appetite.
Risk Management Should Be Purpose Driven
Just as strategy must be risk-aware, risk management must be strategy led. Too often, risk management is treated as a purely defensive function, focusing on downside prevention, compliance and incident response. Important work, certainly, but often disconnected from the organisation’s broader goals.
Modern risk management should enable better decisions, not just prevent bad ones. This means managing risk within appetite. Knowing not only when to say “no”, but when to say “yes” to risk that is worth taking. We need to know when to push and when to step back. Risk management plays a central role. It acts as a compass, helping the organisation take on enough risk to move forward, without overstepping.
This includes:
- Monitoring risk exposures against defined thresholds.
- Ensuring the right controls are in place, enough to effectively manage the risk without creating a bureaucratic mess.
- Encouraging risk-taking where it aligns with strategic priorities and is supported by robust governance.
- Empowering the organisation to stop where it identifies it has taken on level of risk that exceeds its appetite and reassess its path forward.
In short, risk management should empower the organisation to pursue its goals confidently, not just protect it from harm. When done right, it enables agility, encourages innovations and ensures resources are allocated where they will have the most impact.
Risk Appetite as the Bridge
Risk appetite isn’t just a concept for the risk team. It’s a leadership tool, a way to align strategy and risk in a shared language.
When leadership teams agree on how much risk the business is willing to take and that appetite is aligned with strategic ambition, they can make better trade-offs, respond faster to uncertainty and allocate capital more effectively. It sets expectations, guides behaviours and ensures consistency across the organisation.
But for this to work, risk appetite must be more than a statement on paper. It should be:
- Strategic: Tied directly to key business objectives.
- Practical: Reflected in day-to-day decision making and resource allocation.
- Dynamic: Reviewed and adjusted as conditions and objectives evolve.
- Understood by everyone in the organisation.
When strategy, risk management and risk appetite are linked, they reinforce each other. Strategy becomes more resilient, risk management becomes more relevant, and leadership becomes more aligned.
Bringing It All Together
The most effective organisations don’t just manage risk or set strategy, they do both with clarity, consistency and confidence. They ask:
- What are we trying to achieve?
- What could help or hinder our success?
- How much risk are we willing to take?
- Are we taking enough of the right risks?
- Do we have controls in place and are they effective?
These are not one-off conversations. They should be built into planning, performance and governance processes across the organisation.
When strategy is shaped by a realistic appetite for risk, and risk is managed in service of strategic goals, organisations don’t just survive uncertainty, they turn it into competitive advantage.
Lets Have the Conversation
Is your strategy and risk appetite aligned? Is your risk management focused on enabling success, or just avoiding negative outcomes?
At Tykee Advisory, we help organisations align strategy, risk and purpose so ambition turns into execution. If you’re looking to sharpen your edge in a volatile market, lets talk.
July 7, 2025
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