While Juliet Capulet contested the value of ‘a name’ in William Shakespeare’s, Romeo and Juliet, a lot can, in fact, be achieved from changing a name, writes Patrick Smith, director of Acumen Advisory, and principal of Airmic Academy
There is no doubt that the risk landscape is changing faster than ever before. As trade continues to shift and grow in complexity; and technological advances accelerates transformation in business – from tangible to intangible assets – the role of risk management is evolving. It is becoming more strategically important and if the risk management community is to continue adding value to business, it also needs to change and enhance its capabilities.
There are three principle things that need to change to ensure that the risk community continues to advance up the risk maturity curve and really benefit the organisations that it serves.
First, risk must be placed in the centre of strategy creation and strategic decision-making. Risk managers must be at the forefront of and be the experts in collating and analysing data relating to any strategic constraints or accelerants in the management of risk and opportunity. They should be responsible for horizon scanning and drive forward both resilience and developments for the near and longer term.
The second change I would like to see, which is a derivative of the first, is for risk managers to be regarded as trusted advisors to senior-level management and exercise their full potential to inform and guide strategy and strategic decision-making.
This will cement their place at the top table. For this to happen, risk managers may no longer be called ‘risk managers’. In the future, their job titles could take on a new name, the ‘chief strategy officer’ or ‘business resilience officer’, for example. The point is that change is needed.
Risk management has a very bright future, but we must disrupt and transform ourselves and drive risk to be positioned more strategically within an organisation. Given that the role, as I see it, should be central to the achievement of strategic objectives, rather than on responding to headwinds and incidents, we need a more ‘transformative’ job title.
The issue with ‘risk’ in the job title is that, rightly or wrongly, the word can have negative connotations. ‘Risk’ can be regarded in some industries as a blocker to commercial or strategic progress.
And herein is one of the challenges that we must overcome – changing the perception that our stakeholders, c-suite and the board of directors have of risk management. Sadly, our value in aiding strategy isn’t always recognised. Unfortunately, perception is often reality.
Risk management is often regarded as being overly technical and academic. Over the last 30, 40, or 50 years risk management has developed into a ‘science’ because the evaluation of risk, the management of it, and the governance around it can appear to be overly complicated, and somewhat removed from core business objectives.
Equally, risk management frameworks can often provide output that is difficult to understand and, most importantly, hard to use in the practical sense. There is no questioning the significance of risk output, but it must be displayed in a way that provides practical answers – and answer the real question “what should we do next?”
Of course, all of this can be changed – and collectively we can truly effect the future of risk management.
REWRITE THE RULES
If I were to write the #ChangingRisk manifesto for the future, I would rewrite the risk management rules and transform both job titles and the specification of our roles. I would create a career that realises the vision of what we hope risk management to be: the strategist or futurist of the businesses that we represent.
Effective engagement with the recipients of risk management is critical to changing common and embedded perceptions. It would be a mistake to produce a manifesto that does not have the support and influence of the users of risk management – risk management stakeholders, executive managers and boards of directors. Creating a “top down” pressure for change is as important as “bottom up” transformation.
The final item I would place in the manifesto is, ‘change the risk conversation’. We must stimulate discussions around new questions – so, rather than asking the usual questions around what risks might prevail, we should rather ask “given the risk landscape, what is the right strategy and how can we execute it?” As risk professionals, we will naturally assess, mitigate and prevent the risks to strategic success.
So how about it? Let’s nudge at the future of risk management so we become the strategist and futurist, and critical to organisational sustainability and success.