My Vision of Risk Management

Risk Management must be one of the most misunderstood disciplines in the world. Its not insurance, its not finance its not compliance. Its all of these…and more. If used correctly it is a sounding board for the managers of a company to identify risk, capture value and create long term customer confidence and sustainability.

But firstly and foremost its to identify opportunities and move forward in a strategically, tactically holistic way designed around the company values and not each individuals personal needs and KPI´s.

Risk management succeeds when we are curious, adaptive and inspire people. It fails when we make it a box to be ticked and a report to be filed.

However its not a perfect approach to management and leadership. Its embedded in common sense and shop floor practicality. This is then combined with a vision, from top management, fine-tuned to where the world will be in the future. This is different to many people’s idea of collecting historical information and extrapolating it. The world is moving too fast for that and, with disruptive technology playing an ever growing and important role, its getting complicated.

There will be a large group of people who are risk managers but play in their comfort zone. Doing things as they have always been done. Achieving those targets required by regulatory bodies and being comparable to their peers.

There will also be leaders who change the game, take higher risk and play in the unknown arena.

These companies and their risk managers will be driven by change and opportunity rather than compliance and reporting.

The modern organisation will require not only data and information but also experience and knowledge. Through this the company captures wisom and insight but more critically…

… it has the risk appetite and boldness to actually do it. Move forwards, be different and capture opportunities.

The adaptive resilient company will then ensure that the controls that are needed are available and the behaviour suited to this future.

Here’s the brutal truth: It doesn’t matter how much your organization spends…

Making Steel – Continuous Caster

…If your mission-critical systems are obsolete, under funded or not managed correctly then you are losing the battle to stay ahead of the competition.

Adrian Clements

Where risk management can play a stabilising role is smoothing the drivers of a management team defined by short term contracts and the life of a company which is longer. The Anker point of risk management, and good leadership, is stakeholder rather than shareholder value as the stock management is slowly realising.

This means having the business model to manage spin offs and spin ins (creating the ability to utilise the appropriate appetite) and capture more business value than the others

Executing the actions in the right place at the right time and within the appropriate window of opportunity, and stopping projects when not viable, so that full business case value is attained.

Changing the focus of a management system

The questions that need to be answered to manage these critical systems and ultimately get the risk manager into the boardroom are:

  • What does “the future” mean?
  • How does risk management make value?
  • Where to innovate so that we remain sustainable?

Risk management needs to change in order to be come a viable management tool in he future. Today it is not getting the attention that it needs. This is partially due to the fact that there are too many definitions and misunderstandings around. Management don’t always see the value being generated and in many cases it’s a compliance thing.

Insurance, audit, finance, operations are all doing risk management but as each function, or consultant,  explains to top management that what they are doing is the true way forwards then it’s not surprising that the CEO and his or her team are not buying into the model.

Decision making without taking into consideration the individuals risk perspective has taken us where we are today.

The purpose needs to be clarified!

Secondly, I help each company reach short term goals based on the silo of each company’s aims but then create the processes needed to make the approach sustainable. This might mean not reaching the hights of revenue targeted in the short term but surpassing them in the longer term.