Leadership and Growth in Risk Management

In this week’s blog post, we’re sharing insights based on our latest interview with Jim Wetekamp, the CEO of Riskonnect, a global leader in integrated risk management technology. Their platform consolidates data, connects risks, and illustrates their relationships with a growing list of unique risk management applications and risk-correlation engine to help customers understand risk at every level. This time, we are focusing on a timeless yet ever changing topic with latest developments and the effect of the pandemic: Leadership and tackling it from the perspective of risk management, and in particular what Chief Risk Officers (CRO’s) can do to enable an organisation’s exponential growth.

The Role of Chief Risk Officer

Although things are starting to get normalized, the effects of the pandemic are certainly not over considering the emerging COVID-19 variants. We can see new major trends appear as the risk events become more frequent than ever, putting executive level leaders in an uncertain situation. The next big event could be right around the corner and it is important for them to grasp the full scope of risk.

When we look back over the past 18 months, we’ve definitely seen an elevation of risk from all the different facets of an organization, for example on things like cost inflation, supply chain sourcing, elevating climate risk, cyber risk and so on. These all combined create a layering effect and bigger impact on organizations, which is forcing executives to talk about risk differently and mainly related to risk strategy and in a more integrated fashion across their own organization. This also means that the need for a chief risk officer is now clearer than ever, and it’s an essential instrument for shifting to a holistic risk management approach regardless of the size of the organisation.

Organisations are realizing that the most accountable person at the senior level of risk management, whether it may be the chief risk officer or chief risk executive, is responsible for driving the culture, the agenda, and the cross-functional integration around risk. Although, sometimes it is not as easy to figure out who actually is responsible with all these functions and if you were to discuss this during the board meeting, you’ll see a reasonable amount of executives raising their hands.

On that note, it is important to determine the person who can help cut through red tape and eliminate bottlenecks that are cross-functional, who is also ultimately accountable for the key risk indicators that may cross departments or functions, and really can drive that culture change and change management. Essentially this is how a CRO can contribute to having a substantial change on the speed of mitigating risks, and getting ahead of the evolving space of risk. If you’re going to bring in a new person as the CRO, this also shouldn’t be daunting. Most of the CRO’s will have a great starting point on how to implement these changes, as they have the attributes, experiences and skills you would expect from any senior executive. They have the ability to build relationships, view things strategically and to drive initiatives that are completed on time and with positive ROI.

A Strategic Outlook on Risk Management

With the elevation of risk, CRO’s approach on breaking down the silos and aligning objectives to the common goal is also highlighted. This process can be quite tricky as they are all integrated as pieces of the puzzle and dedicated to specific functional areas. If you have a chief risk executive or officer of course, this could certainly be their job, at least to facilitate how it should be done. Otherwise you can also tackle this task with a similar level of thinking through a risk committee or risk steering. Either way, there are a few steps you can begin with:

The first one of these steps is to bring the C-suite together for a specific dialogue or discussion only about risk and taking a pause on operational discussions around progress and growth, or the key initiatives that you already have. This way, you can put various dimensions of risk on the table and calculate your top risk and set the strategic objectives for the year or for a 3-year plan. It is essential to integrate the risk discussion with the strategic discussion, and to lay out a path to kind of set that culture and change.

This discussion should also be followed up by a continuous Risk Management approach instead of an annually or any other periodic risk assessment model. Your risk strategy should be a really comprehensive solution for managing all types of risks, insurance, governance, compliance, strategic risk, financial risk, digital risk, and ongoing trends such as ESG. Accordingly, while you’re carrying out the risk agenda, you should group and correlate the data across all of these risks. Organizations that have a higher level orientation towards integrated risks in the form of breaking silos and bringing these functions together and creating a comprehensive risk strategy will achieve a higher awareness of a risk bearing culture and grow faster.

Challenges and Misconceptions Around Integrated Risk Management

According to Jim, a lot of organizations have trouble grasping the ROI. On that end, oftentimes the complexity of the risk management is considered as a slowing factor or a barrier for an organisation’s growth. However, risk management is not only about the negative factors that can impact an organisation, and can bring out great opportunities — especially if the organisation is successful on integrated risk.

Risk managers and executives should change their outlook towards risk management. Instead of only thinking about how they can stop the negative things from happening, they should think about how they can have an effective risk management strategy where they can devise an attitude on how to make new opportunities happen. It is important to realise that risk management is not a cost, nor a barrier but it can be a great accelerant. Especially with risk management solutions that can provide you with a broader market or support on various risk areas, and allow easier integration of risk.

Takeaway Points

Companies require a tangible progression path but in most cases there’s a lot of things to implement. Many organisations become a victim of following the most evident path, which might not necessarily be the most beneficial one. If your organisation is struggling with this, a great point to start with might be to step back and think about the broader picture in terms of an overtime maturity and starting to lay out phases and steps. For example, when breaking down the silos, consider how much change is enough and map that directly to what the same amount of change and evolution is happening strategically in your organization.

Another point could be made on educating all the stakeholders on integrated risk mindset and promoting its wide use across various platforms. You can have really powerful moments if you bring out your executives, colleagues or customers into a room, and talk about how you can integrate a strategic risk strategy, show some business cases and create an environment where these stakeholders can freely discuss capabilities and bring out interesting concepts on a common topic to develop.

Lastly, you should be looking into your quantification and numbers. Most successful risk executives excel at understanding the KPIs of the business and what makes the business successful. You can start by mapping the key risk indicators and influence the C-suite to steer the business in a more positive direction with concise data. If you’re able to quantify the investments you want to make, to effectively break down silos and risks, or know how to make the organization more resilient with quantification, you’re going to have great opportunities for growth and create a better understanding for the diverse leaders in your organisation.

Closing Words

For now, this sums up the key points of our interview. As the Global Risk Community team, we once again thank Jim Wetekamp, for his insight on risk leadership and integrated risk. More information about this topic is available in our original interview, which is accessible here.

#risk #erm #grc #growth #management #business

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Our purpose as The Global Risk Community is to foster business, networking and educational explorations among our community. Our goal is to be the world’s premier Risk forum and contribute to better understanding of the complex world of risk.

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