Risk management is often seen as a reactive function within business. In this article, Val Jonas, CEO of Risk Decisions, looks at how organisations can use risk management to drive opportunity and propel their business forward. The transformation that risk management brings is through a new mindset of strategic thinking. This is about moving away from short-term myopia towards encouraging medium-term stability through to establishing long-term resilience and positive change.
Risk management fosters confidence in the way your organisation operates. So, you can demonstrate to regulators the proactive, considered approach at the heart of your business. This can extend to managing organisational reputation too, working with internal and external stakeholders, from customers and auditors through to shareholders.
Develop a risk management strategy
The big picture here is building a successful risk management strategy that will improve your business’ performance. This has to start from the top – whatever the size of your business; proactive risk management culture requires senior management sponsorship, so this is essential to success. Take proactive mitigation action when it’s most cost effective, and have sound fall-back plans in place. This exercise ensures you have that full understanding around risk and are well prepared. Agree and use meaningful metrics for monitoring the effectiveness of risk management. Build on lessons that have been learnt, relevant to the context of your business and its aims.
Transition your risk culture
This falls out of your strategy. The more your organisation makes sound risk-based decisions, the more you can demonstrate business confidence. Risk management offers a powerful approach to developing resilience to uncertainty and future change. Knowing you have a robust decision-making infrastructure in place means you can be confident that over the long-term it supports ongoing business performance.
From a cultural perspective, this is about rewarding people for making strategic risk-based decisions that bring benefits to the wider global community. It’s a proactive approach that considers the short, medium and long-term view of risks - and opportunities. Strong leadership and a commitment to engaging everyone in the organisation is a winning theme here. A step-change here is the willingness to take known risks, as these are vital to progress and growth in your business.
Engage at all levels
This is one we invest a lot of energy in. A risk strategy can only be as successful as its ability to engage right across the business. At a recent roundtable, our customers stressed the importance of boosting engagement by recognising what makes people tick. By connecting to the human benefits that risk brings, to improve confidence and connection, instead of simply hitting people with scary data, you can tap into those opportunities and close the gap on risk engagement.
Engage your supply chain
Engage your supply chain in proactive risk management; yes, they need to be able to demonstrate that they can deliver on great risk management practice, strengthening your ability to win and deliver long term business. Make sure that your supply chain isn’t going to let you down by failing to deliver the quality you expect, on time and to budget. Equally making sure they share your business practices will minimise any threats to your reputation.
Successful delivery is dependent on the weakest link in the chain and all too often we see supply chains let customers down. Engagement, due diligence and making your supply chain part of the positive, opportunity management side will really boost the way your business operates.
To transform how you think about risk management, it’s about ensuring it’s considered as a positive function, one that, through robust, cohesive practice, allows your business to thrive and grow. As, Jim Rohn said, “If you are not willing to risk the usual you will have to settle for the ordinary.” Nobody wants that for their business.