It’s glaringly obvious. Risk Management is in the middle of a massive transformation. From the old, compliance focused view of risk, to the new, performance-driven risk management, organizations are beginning to see risk management as a critical part of their success, and a key function across the enterprise. Additionally, risk management is in transformation because the old model has been viewed as complicated, as not providing sufficient value, and someone else’s problem.


Leading organizations, those who have a mature perspective on risk, are embracing it as a driver of profitability, and a key competitive differentiator. They have also recognized that to be truly effective risk management must be Simple, Valuable and Personal.


Simple – I think we all know it, but if something is seen as complex, we are not likely to engage in it. This is true of people and organizations Complexity kills great ideas. If you’re looking to ingrain risk management into the fabric of your organization, and reap the huge benefits that will bring, you have to keep it simple. Start small, get some early wins, and let the organization see how better risk management can help them achieve their goals.


Valuable – If risk management doesn’t create value, it isn’t valuable! The single largest challenge I hear from risk management professionals is that they cannot get their executive to embrace the risk management process. From executives I hear that the value of more involvement in the risk process is not obvious, it’s too complex, and they have a person for that. For risk management to become a pull from senior management, you have to link it to the strategy of the business, and show how effective risk management helps ensure the organization achieves its goals and objectives. First and foremost, risk management needs to be about goals, and achieving them. A mature risk management process can show how goals, KPI’s, financial targets and operational objectives are tied to risks, and how the risk process helps ensure those goals are met. With a wealth of evidence and support for risk management as a significant driver of value, it’s time for risk management to be top of mind for senior management.


Personal – Everyone is a risk manager, many just don’t realize it. Risk management is an everyday process, involving everyone. Each employee plays their part in the process, from identifying risks in the business to implementing controls, to making strategic decisions based on risk-related information, everyone is involved. For risk management to become a cultural component of your organization, you have to have a process which engages each individual personally. It must show them how they fit into the process, why it is valuable to them, and how it helps the organization overall. You have to provide tools which meet their way of working, and engage them in the process on their terms. People need to start seeing themselves as risk management, and actively participating. Mature organizations treat risk management as a culture, and support it with as much commitment and resource as other major activities.


To summarize, risk management is changing. Smart organizations, those who want to lead, and separate themselves from the pack, are working very hard to make risk management simple, valuable and personal. We’ve built the new release of our software, ARM 6, on these principles.


With strong executive support, effective and personal risk management tools, and a commitment to risk as part of your culture, risk management can drive huge benefits.


Leave a Response