So often negative perceptions about risk management have needed to change. It’s astonishing how many C-suite executives still see risk management as a mandatory checkbox-ticking exercise by a department whose function it is to aggregate risk data and generate reports on it.
The Risk management function historically focused on responding to issues, developing worst-case scenarios, and bringing visibility to the organisation’s mistakes and problems. It’s easy to see how organisations developed a negative perception of risk management.
However, in order to drive organisational success and enhance performance, business leaders need to redefine the risk management function and unlock its potential to uncover new opportunities.
By using tools and methods that are already familiar to risk managers — the same function that have protected organisations from risk for decades now, can also be critical to delivering more useful business intelligence for the C-suite.
Hidden within the sea of risk management data is an expansive view of the business landscape – one that includes not only risk, but also new possibilities and opportunities. Risk managers are already equipped with the skillset to aggregate the information and spot trends and can therefore use the data to detect process efficiencies and identify opportunities for growth. They can help the C-suite to take calculated risks, design better-informed strategies and pursue opportunities so the organisation can perform at its best.
Reframing the Role of Risk Management
Before the risk management function stands ready to fulfil its role as strategic consultants to the C-suite, it must have a best practice framework in place to ensure the necessary data is being captured.
To create a mature risk management programme, risk teams must form relationships with business leaders across the enterprise to ensure that risk is front of mind in every department. They must consult with teams across compliance, information technology, cybersecurity and legal to ensure there are no grey areas and that risks from all departments feed into a central repository.
Capturing data in a consistent way is also a prerequisite for risk management functions to add more value. Historically risk management processes and systems have grown organically to meet requirements and have often left businesses with disparate and siloed systems. Teams must use technology to amalgamate the data into a central platform to build a holistic view of risk.
In a recent webinar we held with thought leader and GRC pundit Michael Rasmussen he commented “The greatest challenge for compliance right now is managing change and keeping all that change in sync – from legal and regulatory change, to changes in the external risk environment, as well as changes to the internal business environment”.
As Michael alludes to, it is clear to see the number of risks has grown, and risk types have become more diverse, heavily affected areas include regulatory environments, third-party risk and cyber threats. A Risk Managers goal is to centralise this data to enable comparison of results and identify potential impacts, trends and opportunities.
Creating a positive view of your risk management team
For risk management teams to unlock their potential and become trusted informers to the C-Suite, the overall perception of risk management needs to be reframed. This positive view must be recognised and acknowledged by senior business leaders in order to echo throughout the organisation.
Risk management teams already hold invaluable amounts of data across departments relating to business operations. Once the C-Suite sees values in this data they will want even more!
Risk management thought leader and OCEG fellow, Norman Marks also believes there could be a richer role and brighter future for the risk management function. In a recent webinar he spoke about a chief risk officer he knew who changed the name of his department from “risk management” to “decision support.” This simple reframing of the department’s image conveyed how much more his risk managers could do for their organisation.
Norman added “Too often the risk team is seen as the department of ‘No’; the department that quite literally stops people from doing what they want to do and diverts them from what they see as running the business.” Often, boards and C-suite leaders focus on the big picture, while risk and compliance contribute at only an operational level, inhibiting the value of risk management teams.
This is why studies consistently show that “80% of executives think of risk management as a compliance activity,” and only 3% of executives and board members see risk management as vitally important to setting strategy. Once business leaders begin to see the hidden value in risk management these figures are likely to pivot over the coming years.
Executives and board members would benefit from greater awareness of how risk management tools, models, language and techniques could contribute to strategic planning and corporate goal setting. With this awareness, their organisations could derive greater value from the expertise and information already resident in their risk management departments. Giving leaders the opportunity to exploit risk intelligence to drive success and accelerate growth. For more information on this watch our recent webinar ‘The Journey to Success Start with Risk & Strategy Integration’.
Expanding Risk Management’s Role into Strategy
Risk management teams are often separated from strategic board meetings, but striking advantages emerge when they’re closely linked. Risk managers are often viewed as enforcers — whose findings enforce rules and inhibit action — but risk teams could be identifying strategic advantages and opportunity as well.
Risk management data is essentially business intelligence – and it isn’t all doom and gloom. Within that data risk teams can help uncover new opportunities and identify risks worth taking. Making use of risk intelligence provides leaders with a realistic real-time view of the current status of the business, so they can make informed decisions that guide their strategy.
Supporting Strategy, Tracking Outcomes
Without monitoring your strategic goals & metrics, it’s impossible to know if an organisation is on track to achieve its strategy – or if it needs to shift its focus. Risk managers’ skills can be as readily applied to measuring progress toward goals as they are to identifying risk and uncovering opportunity.
This is why risk management should be linked to strategy and become an integral part of the strategic decision-making process. Executive boards should work more closely with risk managers to build the intelligence that will drive the strategic direction of the organisation and drive assured decisions backed up by facts.
Armed with the right tools risk teams can not only identify opportunities for process efficiencies and growth, but also make predictions about the future by assessing likelihood and impact.
Driving New Insights
The importance of linking data and process so organisations can derive the greatest possible value from risk and compliance data has never been greater. Camms has helped its clients achieve business success by linking their data and processes so that corporate strategy, risk intelligence and compliance can reside on a single platform. This unified approach to GRC provides leaders with insights and opportunities to identify the connections that inspire new competitive strategies and goals. Sharing intelligence on integrated GRC platforms in this way ensures alignment of corporate strategies, policies and risks, and elevates organisational performance to gain competitive advantage.
To learn more about how Camms.Risk can help link your corporate strategy to your strategic risks, request a demo.