Risk management is not only about avoiding or minimizing losses, but also about creating value and seizing opportunities. To do that, risk managers need to foster a culture of innovation and learning in their organizations, where new ideas are encouraged, tested, and implemented. How can they achieve that? Here are some tips.
The first step is to align risk management with the strategic goals and vision of the organization. Risk managers should understand the drivers of value creation, the sources of competitive advantage, and the potential disruptors in the market. They should also communicate the risk appetite and tolerance of the organization, and how they support the strategic objectives. By doing so, they can help the organization identify and pursue the right opportunities, while managing the associated risks.
The superpower of the Risk Leader is systems thinking: “How does A connect to B in my organization and what are the implications of that connection for the business line and the risks that they own?” Understanding and being able to articulate that is a necessary part of a meaningful value proposition for Risk Management.
A Risk Leader can foster a culture of innovation & learning by doing the following - 1. Treat setbacks & failures as learning opportunities & as feedback loops. 2. Encourage new ideas, controlled experimentations. 3. Regular Cross functional interactions & meet ups to exchange & understand perspectives & dependencies. 4. Lastly, encourage training, learning & development via external tie ups, experts engagement & so on. These help make the risk team's role more exciting & boost confidence.
?? Aligning risk and strategy is a critical component of effective corporate governance. ?? Aligning risk and strategy is not just about ticking boxes; it's about embedding risk thinking into the fabric of the organization. By understanding the risks that could derail our strategic goals, we can make informed decisions that protect our value-creation potential. ?? I always emphasize the importance of embedding risk management into the organization's DNA, not as an afterthought but as an integral part of the decision-making process. I advocate for a data-driven approach to risk management, leveraging technology to gain insights from vast amounts of data and inform risk-aware decisions.
Working with different teams can be challenging at times. During risk identification exercises, begin to foster the team to link risk control measures with possible outcomes. Example, these risks are to be grouped to human error vs. process issues. Risk control exercises lead to discussions of cost benefit in avoidance or training.
As a project manager, I understand the significance of coordinating risk management?efforts with the project's strategic?objectives. Risks must be identified and managed in order for a project to be completed effectively. It is possible to increase the likelihood of a successful project outcome by coordinating risk management with the project's desired outcomes. Also aligning risk management with strategy is, in my opinion as a knowledge manager, crucial to successful knowledge management. Threats to an organization's capacity for knowledge creation, dissemination, and application must be identified and mitigated. Knowledge managers may ensure that the risks being recognised and managed.
The second step is to empower and engage the people who are involved in or affected by risk management. Risk managers should create a culture of trust, collaboration, and feedback, where everyone feels comfortable to share their insights, opinions, and concerns. They should also provide training, coaching, and recognition to enhance the skills and motivation of the staff. By doing so, they can leverage the collective intelligence and creativity of the organization, and foster a learning mindset.
Very easy answer as most cultural issues: simple walk the talk...!!! .
Risk managers are only minimally effective when they focus only on what a team can't do because of risk. Risk managers provide the most value when they can integrate with business strategy and collaborate on how that strategy can be accomplished within risk appetite. This is a fundamental shift in mindset.
Managers should promote a growth mindset, emphasizing that it's okay to make mistakes as long as they're used as opportunities for learning and improvement. Providing resources for continuous learning, like workshops, training sessions, or access to relevant materials, can also help stimulate innovative thinking. Establishing a feedback loop is also critical. Regularly checking in with employees, collecting their input, and using it to refine processes or strategies can help create a dynamic environment that encourages both innovation and ongoing learning.
In my experience as as a project manager, I understand the need of risk management empowerment; complex projects demand diverse stakeholder input and collaboration. Risk managers can encourage open communication by fostering trust and camaraderie. This improves risk identification and project outcomes. Training and coaching empower and engage risk managers. Risk management training can assist stakeholders understand project hazards and how to manage them. Finally, acknowledging triumphs promotes learning, stakeholders are more inclined to participate in risk management if they feel valued.
The focus should be on risk TOLERANCE. No organisation has an APPETITE for risk - if it could make its targeted profit (or more than) without taking any risk it would.
The third step is to experiment and learn from the outcomes of risk management initiatives. Risk managers should adopt a agile and iterative approach, where they test new ideas, measure the results, and adjust accordingly. They should also encourage learning from both successes and failures, and share the lessons and best practices across the organization. By doing so, they can promote a culture of innovation and learning, where risk management becomes a source of value creation and competitive advantage.
Testing new ideas and experimentation is an overlooked but critical aspect of risk management. There are times when qualitative, not quantitative solutions, are needed to advance the socialization of risk management. Everyone's orientation towards understanding risk management is not the same and will require adaptive leadership skills to usher in new ideas. Risk managers must be bold and tap into approaches that will elevate the visibility of risk management, as well as engagement. That takes creativity and experimentation, but mostly understanding how end users see the organization from their perspective. Try approaches that are not the status quo and challenge traditional approaches to implementing risk management.
The fourth step is to use data and technology to support and enhance risk management. Risk managers should leverage the power of data analytics, artificial intelligence, and automation to improve the quality, speed, and efficiency of risk identification, assessment, and response. They should also explore new technologies and platforms that can enable new ways of delivering value, engaging stakeholders, and solving problems. By doing so, they can optimize the performance and resilience of the organization, and keep pace with the changing environment.
Risk managers play a fundamental role in fostering a culture of innovation and learning within their organizations by making data-driven decisions. This encourages proactive thinking, adaptability, and a willingness to explore new ideas for growth. By analyzing historical data and identifying patterns, risk managers can make informed decisions, and better anticipate potential risks and opportunities, allowing the organization to proactively adapt and innovate.
The fifth step is to monitor and adapt to the internal and external factors that affect risk management. Risk managers should establish a robust and dynamic risk governance framework, where they define the roles, responsibilities, and processes for risk oversight and reporting. They should also scan the horizon for emerging risks and opportunities, and update their risk strategies and plans accordingly. By doing so, they can ensure that risk management remains relevant, effective, and aligned with the organization's needs and goals.
The sixth step is to collaborate and network with other risk managers and stakeholders, both inside and outside the organization. Risk managers should seek to learn from the best practices, experiences, and innovations of their peers and partners. They should also participate in industry associations, forums, and events, where they can exchange ideas, insights, and feedback. By doing so, they can broaden their perspective, expand their network, and enhance their reputation as risk management leaders.
Os gestores de riscos podem trabalhar em estreita colabora??o com as equipes de inova??o para identificar e avaliar os riscos associados a novas ideias e projetos. Isso envolve a análise de riscos potenciais, a determina??o de sua probabilidade e impacto, e o desenvolvimento de estratégias para mitiga-los.
I find it interesting that most banks are not using their data to one of its most useful purposes - for example, banks with salesforce applications can query their data for borrowers with low liquidity and help their borrowers with that, or high liquidity and increase sales calls to those borrowers.