Risk is about uncertainty and therefore has an element of luck. But, just as experienced gamblers can swing the odds in their favour, businesses should commit to improving their risk management capability. “Ticking the box” provides false-assurance which organisations can ill afford given the pace of change, complexity and competitiveness in most sectors.
The biggest challenge for risk management is getting senior leaders to take it seriously and commit to improving risk management effectiveness. The business discipline and organisational capability costs little but the potential gains are immeasurable in terms of performance, profits, operational resilience, people, culture, reputation and sustainability.
How do we do it right? Start with culture
Risk management starts and ends with people. We need the right culture and behaviours in the business, specifically ETCHED. We need to Empower staff to manage the risks they own, promote Transparency, innovation to Challenging the status quo and Holistic thinking to see the wood from the trees. In addition to a risk process, we need to Embed risk in decision-making and finally bring Data into the risk discussion to help make better decisions. From this you will know where you really stand, which will deliver real comfort, confidence and assurance.
Simple risk management process
Introduce a simple risk process and using risk management as a problem-solving tool. Try identifying and explaining risks in the form of a problem statement. Assessing risks so you can compare and prioritise. Treat risks by solving problems and monitor risks with data i.e. key risk indicators (KRIs) for a performance management approach.
Governance that works
Clear roles separating ownership from oversight, good quality management information leading to productive discussions, decisions and actions. Leaders use sound judgement of whether they are satisfied that the biggest risks are appropriately managed. No room for politics or buses, just facts, data and evidence combined with a clear problem statement and risk narrative to help the business move forward.