Almost every industry is in the grips of a seismic shift driven by technology. A critical capability required in helping organisations deal with this fast changing and increasingly complex world, is effective risk management. Central to Risk Management’s ability to help the business understand the risks they are running, where risks are not being managed sufficiently and to make consistently better decisions, are the day to day interactions they have with the leaders and staff – each one an opportunity to add value to the business and enhance Risk’s position and reputation. We refer to these communications as ‘Quality Risk Conversations’.
These range from monthly reporting to the Board Risk Committee, through input to major change programmes and key product development processes, down to daily conversations with front-line staff around risk issues and incident reporting. Having a clear view around: (1) what are the key ‘moments that matter’ for risk management in the business, (2) what does a ‘quality conversation’ look like in each situation – looking at it through the eyes of all relevant stakeholders – and then (3) focusing on increasing the number and quality of these, will drive significant improvements in the effectiveness of the risk management framework and the way Risk is viewed in the business. It is a different way of thinking about how you embed risk management in an organisation and can work as a useful overlay with existing approaches and activities.
Making this happen is not an easy task. A ‘Quality Risk Conversation’ usually involves 3 key ‘ingredients’…
- Quality Framing: something that provides context and parameters for the discussion or interaction e.g. strategies, risk appetite frameworks, policies and processes.
- Quality Information: providing reliable analysis and insights to enable an effective conversation between the parties involved.
- Quality People: the right balance of skills and experience, delivered in a way that ‘lubricates’ the path to understanding, agreement and action. In a complex, fast changing environment, it is also about being agile and flexible.
In talking to Risk Executives, it is fair to say that whilst the biggest element of any Risk function’s spend is on people – hiring, remuneration, development/training and performance management – most of the improvement activities being undertaken are focusing on: developing frameworks, methodologies, policies and processes; building or procuring tools and technology; and data analytics and reporting.
Making sure that the Risk people participating in these ‘conversations’ always have the right balance of skills, competencies, behaviours and personal qualities to deliver the desired outcomes on a regular basis, must be a priority for all organisations. The ‘quality people’ dimension is the ‘glue’ that holds the conversation together and will ‘make or break’ whether a successful outcome will be achieved.
In our recently completed research, ‘What Makes A Successful Risk Leader’, we got a much better picture of what ‘good looks like’ when it comes to leading in risk management and what sort of development current and future leaders need to make that happen on a consistent basis. It was also clear that the availability and quality of the right type of development support i.e. experiential in nature, was lacking in most organisations.
If we want to increase the number of ‘Quality Risk Conversations’ and drive the benefits they deliver, we must be prepared to challenge whether we are doing enough to enhance all three ‘ingredients’, and in particular around the people dimension.
Ask yourself the following key questions:
- Do you know what the risk management ‘moments that matter’ are in your organisation?
- How well are you doing in these?
- If they are not hitting the mark, where are you falling short – framing, information or people?
- If your people are not contributing consistently to deliver more ‘Quality Risk Conversations’, do you know what is going wrong and what you could do to improve?
Dougie McAndrew, January 2019