Important things in life are not easily reduced to 10 easy steps. Nevertheless, this series provides a list of 10 building blocks to achieving long-term success in risk management from someone who has spent more than 25 years striving to carve out the most satisfying career possible, while never losing sight of the attributes attached to the bigger picture. Part 1 is here, Part 2 here and Part 3 here. This is Part 4 in the series.
7. Developing the Bench
While all managers are expected to develop their employees, this aspect of management is harder in risk management than in many other disciplines or functions, if only because of the often smaller teams. But getting the right bench strength established is essential to getting the risk management fortified for the hard times that will inevitably arise. The right bench will also improve the chances of sustained success.
Just finding great people is hard enough. In the risk management world, keeping them can be more challenging for a variety of reasons, including limited upward mobility because of the small team size. However, there are ways to deal with this limitation. For example, GE is well-known for running talented managers though the audit function, where managers have opportunities to gain a broader and deeper understanding of what makes the business tick.
Taking a similar approach with risk management accomplishes the same goals and argues for a regular rotation of talent through both risk management and operations. This allows talented people to be exposed to other leaders and their functions, perhaps opening doors of opportunity. Doesn’t that detract from developing long-term risk leaders? At first blush, it may look that way. In reality, the approach furthers another goal all risk leaders should have; namely, to make every employee into a “little risk manager” for the specific risks for which they are accountable.
While the actual direct report bench of the average risk department will often appear shallow, it can be deepened by considering all employees as a part of the risk team and emphasizing risk stakeholders who can be rotated through risk management to help build a risk culture. Be sure to consider vendor/supplier partners to be part of the team. As we’re all in the risk game together, it behooves every risk leader to look at teams in this broader, more inclusive fashion.
Finally, don’t forget interns. Many view interns incorrectly, as a drag on an already small team, requiring time-consuming training, coaching and direction that fully trained employees may not. Others think interns are only good for mundane tasks and end up underutilizing their skills. But if there is a good intern recruitment strategy—recruiting from the “right” schools and presenting an attractive case for why students should intern in risk management—great interns will be discovered who can materially contribute to the success of both the team and its mission. The key is to not think of them as “temps” but as those who lend themselves to being developed over time for full-time roles. This approach will demonstrate commitment to a solid intern program, which in turn will attract the best and the brightest and broaden the recruitment and team effectiveness strategy.
8. Supplement Value Preservation With Value Creation
While protecting and preserving is job one for risk leaders, the bigger opportunity is helping others understand what it means to exploit risk for gain. This is a foreign concept to many because they don’t think in terms of risk when they’re stress-testing a strategic plan and its component parts . Therein lies the tremendous opportunity to find a way into the planning process, by helping planners make this connection, and understanding the relationship between risk and success.
Because every risk represents the possibility of failure for organizations, the ultimate challenge for all risk leaders is getting a seat at the planning table, to educate, inform and contribute to the thinking of those charged with plan development and measurement. Don’t be fooled into thinking , however, that acceptance in this realm is a slam dunk. Just as the value proposition for enterprise risk management has been difficult for many to articulate and sell, so planners are naturally skeptical about allowing risk managers to participate directly in their process. Part of this reluctance comes from the reality that, in many organizations, the C-Suite is not sold on risk management as a strategic contributor to helping define success for the enterprise. This stems from the dated perception of risk managers as “just insurance” managers. But, as entrenched as that perception may be in many organizations, it is changeable. That is the challenge.
Central to changing this perception is helping educate key management on how risk can and should be leveraged for gain—the upside of risk. Every risk leader needs to educate and make organizations more aware of risk “opportunities” and be willing to take the personal risk associated with doing so. This personal risk is one reason many risk leaders have not evolved into the strategic advisers that can be the pinnacle of the profession. Don’t assume that, just because someone is adorned with the title of chief risk officer, that she is actually acting as strategic adviser. Many are just high-level risk owners with accountability for some related processes, rather than truly “enterprise-wide” risk leaders.
