How do you encourage risk awareness and learning?

As a Risk Management certified professional I am a strong advocate of encouraging risk awareness and learning. It’s vital for effective risk management.?? Here are my 6 recommendations to achieve this: 1. Regular and tailored training on risk management concepts, methods, and tools is essential. Use engaging formats like case studies and simulations. 2. Create a safe environment for open and constructive risk dialogue and feedback. Encourage team members to share insights and experiences. 3. Motivate staff by rewarding and recognizing their efforts in risk management. 4. Foster a culture of risk awareness and learning. 5. Enhance the service team's ability to identify and manage risks through a structured approach.

Your risk appetite should complement your strategic goals. For instance, if your strategy involves rapid expansion, your risk appetite may allow for more aggressive financial risks. Conversely, a strategy focused on stability might warrant a more conservative risk appetite. Your risk appetite should reflect your organization's core values and culture. For instance, an organization with a strong commitment to innovation may have a higher risk appetite for experimenting with new products or technologies. Recognize the expectations and risk tolerance of your stakeholders, including shareholders, customers, and regulatory bodies. Ensuring alignment with these expectations is vital for maintaining trust and reputation.

We can consider the real life example of any person whether a normal student or a startup founder. For a normal student the risk lies in utilizing the time properly to achieve his or her goals. Tolerance depends on how quickly they can grasp and remember to spend the remaining time. For a startup founder risk lies in spending time, idea and money. Tolerance depends on how much they are willing to lose time and money, yet they can raise again.

I once went to a doctor and he asked me if I wanted a given test. My thought was - "how do I know, I'm not a doctor." What he should have told me is what are my options and under what circumstances one option is better than another. Buying real estate is no different. I've seen clients make good decisions / mitigate the risk of making bad decisions when they know three things: 1. What are their optoins 2. What is the pmt &costs associated with each option. (sometimes a payment is surprisingly lower than one assumed; sometimes its much higher than assumed - either way clarity results) 3. Under what circumstances one option is better. For example, for one client, it may only make sense to refi if they own the home >2 yrs.

Risk owners are individuals or teams responsible for specific risks within their domain. They are accountable for identifying, assessing, and managing risks, as well as implementing mitigation strategies. Also , risk champions act as advocates for risk management within their departments. They help communicate the importance of risk awareness and facilitate risk-related activities. Risk managers : oversee the organization's overall risk management strategy. They ensure that risks are appropriately identified, assessed, and addressed throughout the organization. Risk Committees or Boards: These bodies provide oversight and governance for the organization's risk management efforts.

Keep in mind, risks are different for different industries. Construction project risks are distinct from software project risks. Studying risks in any field is helpful to grasp key concepts. But it's important to study risks in your particular field. Study projects that have failed. Why did they fail? What could have been done to prevent that failure? How does that insight apply to your project? A great book to understand the impact of unchecked risk is "To Engineer is Human" by Henry Petroski.

Risk management is not an innate skill; it's a discipline that can be learned, honed, and integrated into an organization's DNA. Here's why investing in risk training and education is essential: Risk training introduces your team to the fundamental concepts and principles of risk management, ensuring that everyone speaks the same language and comprehends the basics. Risk training also sheds light on the benefits of risk awareness and learning, as well as the challenges that may arise. It provides context for why risk management matters. Effective risk training is not one-size-fits-all. It should be tailored to the specific needs, interests, and capabilities of your team members.

I agree that having a safe and supportive environment for open dialogue is fundamental for constructive discussions about risk. Without it, the output can be incomplete (at best) or inaccurate, misleading and/or disconnected from organizational objectives. In my experience, even mature organizations are not familiar with HOW to do this, especially in circumstances that involve stakeholders at different levels - meaning encouragement and education are not enough. Establishing trusted individuals at various management levels throughout the organization who can (and will) champion and facilitate such discussions, allowing all ideas to be heard and considered, is critical to creating the culture of risk awareness.

Open dialogue allows team members and stakeholders to share their unique perspectives, insights, and experiences related to risks. Constructive dialogue encourages individuals to question assumptions and explore alternative viewpoints. This challenge can lead to more robust risk assessments and innovative risk mitigation strategies. Every interaction becomes an opportunity for learning. By sharing successes and failures, individuals and teams can draw valuable lessons from their experiences and those of their peers. An environment of open dialogue fosters transparency. When people feel safe sharing their concerns and observations, it prevents the concealment of risks and problems until they escalate.

From my perspective fear is a very real concern. When one is trying to gain a perspective; sitting in meetings with the “boss” does not always disclose information that could be very helpful. Fear of negative repercussions by a subordinate who fully discloses information is more often than not an issue that needs to be addressed in a confidential manner. Then, meeting with the employer will open greater dialog to discuss what information has been obtained.

Rewarding risk behavior and outcomes serves as a powerful motivator. It not only reinforces desired behaviors but also sends a clear message that the organization values risk awareness and learning. This approach can lead to several benefits: Team members are more likely to actively engage in risk management when they know their efforts will be recognized and appreciated. A culture that rewards risk-taking fosters innovation. Team members become more willing to explore new ideas and approaches. By encouraging a willingness to learn from failures, organizations become more adaptable and better prepared to navigate uncertainties. Recognizing and celebrating successes builds confidence and resilience within the team.