Commercial cannabis businesses operating in dynamic environments use risk management principles to assess risks while seizing opportunities to achieve overall business objectives.
Applying risk management principles adds value to all commercial cannabis businesses’ stakeholders by proactively identifying and addressing risks and opportunities. Engagement of the commercial cannabis business’s board of directors, owners, or highest level of senior management (referred to generally as the “board”) is needed to carry out an effective risk management framework, which is then applied across the commercial cannabis business.
A Cannabis Risk Management Framework (CRMF) is a framework for which risks and opportunities can be identified within the context of business objectives and programs are established to operate within the risk appetite. The commercial cannabis business can assess the risks and understand the risk profile once objectives and the risk appetite are set. The risk assessment enables prioritization and tailoring of the risk-based control activities. To establish the optimal risk-based decisions, management uses the risk profile to inform its analysis of business opportunities. The dynamic nature of operating a business requires effective monitoring of known risks to identify changes to the risk profile over time. Training informs all individuals of their job responsibilities in compliance with company policies.
Components of the CRMF
Components of an effective CRMF support the commercial cannabis business’s objectives.
Select a component in the diagram for an explanation.
The six components of the CRMF are required for an effective risk program. The emphasis of the components and the order that they may be addressed will vary. It is imperative each of these components are addressed throughout the risk program lifecycle in order for risks to be comprehensively managed.
CRMF and the Risk Program
It is important to understand how the CRMF and risk program are related. The CRMF provides guidance on what needs to be considered, while the risk program outlines how those considerations will be implemented. The CRMF is the mechanism through which roles, responsibilities, and authority are evaluated. The risk program is the related set of risk policies and procedures across business units designed to identify potential risks that may affect the commercial cannabis business. The goal of a risk program is to protect and minimize risks to property, services, and employees while increasing public safety and reducing public harm.