How should a commercial cannabis business's risk strategy typically be developed?

A commercial cannabis business's risk strategy is typically developed through a process that involves management creating the strategy and then seeking approval from the board of directors. This process is crucial as management is responsible for understanding the operational realities and potential risks that the business faces on a daily basis. They can assess risks related to compliance, financial stability, supply chain issues, and regulatory changes.

Management's insights allow for a tailored risk strategy that addresses specific challenges the business might encounter. The board of directors plays a critical oversight role; their approval ensures that the risk strategy aligns with the organization's overall goals and risk appetite. This collaborative approach between management and the board fosters a robust governance framework, essential for navigating the complexities of the cannabis industry, which is highly regulated and subject to rapid changes.

Other methods, such as engaging external auditors, gathering employee feedback, or focusing solely on market trends, while beneficial in their own right, do not encapsulate the comprehensive and aligned approach that management and board collaboration provides for risk strategy development in a commercial cannabis context.