Risk management is transforming, but data is the game-changer in #ChangingRisk for the future, says Danny Wong, founder of GOAT Risk Solutions and former director of corporate risk at IHG
For most corporate businesses, low-hanging fruit is no longer easy to pick. Tough competition, fast-evolving markets and regulation mean businesses can only grow by taking and managing risks better than the competition.
The risk landscape is indeed getting more acute, and in the face of this, the risk management profession is transforming. Many progressive and leading practitioners share common approaches and are influencing the boardroom.
My thinking and ethos for risk management is not only shaped by 20 years of ERM experience, but I’ve had the privilege of leading a piece of market research – a risk maturity survey – spanning three years; and built on data from 150 companies and interviews with more than 50 business and risk leaders.
Through my work, I can see that the risk profession is making inroads in helping corporates move towards a more holistic and risk-efficient future. It is changing fast and moving in the right direction, with many talented risk managers breaking new ground and inspiring great work.
These professionals are distinctive in that they refrain from traditional risk terms, no longer communicating with stakeholders and senior executives in terms of ‘risk frameworks’, ‘risk culture’, ‘risk appetite’, or ‘best practice’ – even if their practice include these risk management concepts. They keep things simple, while holding a deep understanding of their business including knowing where the real challenges are; what the corporate culture is; and how decisions are made.
Earlier in my career, I joined a major project team and was introduced as someone who ‘represents the views of the board’. I laughed off this grand introduction and simply affirmed that I was there to help colleagues think about risks and their implications to the wider business. In hindsight, I now appreciate this as a compliment that extends to all ERM practitioners. This is because – as the risk landscape continues to evolve and grow in complexity – we, as a forward-thinking risk community, have a real opportunity to engage and influence stakeholders, break down organisational silos and shape the thinking of the board.
Forward-thinking risk managers have strong relationships, are respected as leaders and have the gravitas to influence decision-making. We generally agree that it is insufficient to use tools such as risk scoring (beyond prioritisation); and that real decision-making requires access to relevant facts and data.
Data can be easily manipulated and can be dangerous but is powerful when wrapped around a clear risk narrative. Data is a core area that we must all embrace today and in years to come. Today, data is an area that many risk managers put down as a ‘work-in-progress’. This is, by and large, because data within their business’ is disjointed, inconsistent, inaccessible, or unreliable. And available data often goes unused or confusion exists over what should be measured and reported.
This is precisely where the risk profession can make a shift – from the parochial risk management journey to a data maturity journey.
My vision for #ChangingRisk and the future of risk management, is for all companies to have ERM embedded across the business and for it to effectively operate to help stakeholders identify, prioritise and solve their biggest problems. For risk professionals to take the lead with data and use it to inform actions or evidence progress. When data is wrapped in a narrative that reflects the nuances of the business, we can truly facilitate incisive and strategic decision-making. In time, the risk management profession will become the embodiment of this collective information, i.e. combining the narrative and the data for all key issues across the business, enabling risk managers to rightly take their place as trusted advisors to the board.
We must turn good ideas into action. I’ve taken the best practice that I’ve witnessed during my market research, along with my own career experiences and developed an e-learning programme entitled, Unlocking the boardroom. This is a comprehensive guide on how to use risk management in a way that would engage and resonate with non-risk stakeholders: how to set up a ‘risk framework’ that engages senior executives; how to run workshops that work;; steps to bringing data into the risk discussions, and how to use ‘risk appetite’ to deliver value across the business. These are teamed with downloadable slides, documents and templates that I have honed throughout my career.
Goats are a sure-footed animal that can scale great heights with confidence, I started GOAT to help the profession achieve greatness through risk management and data. The Unlocking the Boardroom course captures our ethos and approach to risk management. This is supported through GOAT Risk™, a modern secure cloud-based risk software platform that brings these ideas to life. It seeks to enhance engagement with senior stakeholders, embed risk management capability and empower decision making with data-led approach to risk management. Find out more at www.goatrisksolutions.com.