Leaders around the world, and their people, face the critical challenge of managing risk to deliver business success. However, the concept of risk management is often presented in a complex and framework-driven manner by risk professionals. To foster a culture of embracing risk-taking and delivering the best outcomes for customers, this needs to change.
To overcome this challenge, there are eleven simple tips that leaders can follow to manage risk effectively. These tips can help leaders foster a culture of embracing risk-taking, while also ensuring that their organizations are well-positioned to deliver the best outcomes for their customers.
What if we could make risk management clearer for managing our BUSINESS?
Tip 1 – Work Together
Effective risk management is critical for every organization and its employees. ClearRisk has outlined “10 Reasons Risk Management Matters for All Employees” which emphasizes the importance of working together to manage risks. In any successful team, members must support one another and collaborate to effectively manage risks.
Tip 2 – Think Differently
Apple shone a light on “thinking differently” to achieve an impact on its customers and its people.
Managing risks is similar to innovating in other areas of business. To successfully embed risk thinking, it is crucial to allow for agile and alternative approaches to risk management. The key lesson from past experiences is not to repeat what has always been done, but rather to make changes to how you manage your business to ensure the best outcomes for your customers.
Tip 3 – Leverage Support
Collaboration is essential to success, and we cannot achieve anything alone. Leveraging the support and expertise of our colleagues is crucial to ensure that we make the best decisions for our customers and each other. The most successful organizations recognize and utilize the strengths of their experts, relying on them to drive outcomes while remaining accountable for those outcomes. Leveraging support does not mean relinquishing accountability; rather, it means engaging others to deliver on our shared goals.
Tip 4 – Connect Everything
According to Conserve’s article titled “The Fundamental Risk Management Skills that Every Leader Should Possess” having an eye for detail while also seeing the big picture is essential. Connecting all the pieces together when it comes to managing your business and risks requires this skill set.
” …you need an eye for detail, being able to spot gaps where further research is needed and being able to see the finer points of day to day risk management as well as the bigger picture.”
Conserve
Tip 5 – Plan for the Worst
The Global Financial Crisis of 2008 and the COVID-19 pandemic of 2020 have demonstrated that significant events can occur in any business over the last two decades. While being optimistic is crucial for business success, it is equally important to plan for the worst-case scenarios for both your customers and your business. Failing to challenge ourselves to explore both optimistic and pessimistic futures often leads to business failures.
Tip 6 – Research and Learn
In a world that is constantly changing, one thing remains consistent: the importance of continuous research and learning. It is crucial to prioritise ongoing personal and professional development, as it allows us to expand our knowledge and skills. We should never stop growing our minds and should aim to continuously broaden our understanding of various topics. By doing so, we can remain adaptable and equipped to handle any challenges that come our way.
“He who learns but does not think, is lost! He wHO thinks but does not learn is in great danger.”
Confucius
Tip 7 – Look Below the Surface
The iceberg image analogy is not only applicable to business and risk management, but can also be used in various aspects of our lives. In fact, the iceberg analogy has been used in many fields, including psychology and personal development, to emphasize the importance of looking beneath the surface to understand the deeper layers of our emotions, thoughts, and behaviors.
Moreover, critical thinking skills are essential for problem-solving and decision-making, not just in business but in every aspect of our lives. By using tools like root-cause analysis, bow-tie method or 5-why’s, we can explore the underlying causes of a problem, rather than just treating the symptoms. This approach helps us to identify the root cause of the issue, and to develop effective solutions that address the underlying problem, rather than just the visible symptoms.
Furthermore, managing risks is an important aspect of any business, and critical thinking plays a crucial role in this process. By examining potential risks and assessing the likelihood and potential impact of each risk, businesses can develop effective risk management strategies that help them to mitigate potential losses and ensure their continued success.
Tip 8 – Embrace Technology
“Attempting to succeed without embracing the tools immediately available for your success is no less absurd than trying to row a boat by drawing only your hands through the water or trying to unscrew a screw using nothing more than your fingernail.”
Richie Norton
Managing risk is ultimately a human responsibility, as technology alone cannot guarantee effective risk management. However, technology can serve as a valuable enabler by facilitating important conversations and documenting outcomes. Without the right tools, the focus on managing risk can be lost in the process of completing risk assessment tasks, rather than achieving desired outcomes.
Tip 9 – Don’t be Blinded by Reward
History has repeatedly demonstrated that focusing solely on financial rewards can lead to poor outcomes for both customers and businesses. However, by recognizing a greater purpose and being there for our customers in their time of need, we can achieve a more powerful and enduring reward. By cultivating strong relationships based on trust and empathy, we can create lifelong relationships that last for generations to come.
Top 10 – Balance All of the Parts
Much like our bodies and minds, our organisations also require balance in order to thrive. It’s not enough to focus on just one area of the business, such as financial success, at the expense of other important factors, like employee well-being or community impact. Rather, we must strive to balance all aspects of the organisation, including its financial performance, its impact on the community, and the well-being of its employees and stakeholders.
Achieving this balance requires a commitment to understanding the needs and priorities of each stakeholder group, and taking a holistic approach to decision-making. For example, by prioritizing employee well-being and investing in training and development programs, organisations can build a more skilled and engaged workforce, which in turn can lead to higher levels of customer satisfaction and loyalty.
“We can be sure that the greatest hope for maintaining equilibrium in the face of any situation rests within ourselves.”
FRANCIS J. BRACELAND
Tip 11 – Monitor What is Around You
In today’s fast-paced world, it’s easy to become distracted by the latest “shiny new toy” and lose sight of the many things that require our attention. When it comes to managing risk, it’s critical to stay focused on monitoring multiple factors simultaneously, both internal and external to our organisations and ourselves.
This requires a proactive approach to risk management, where we regularly assess and evaluate potential threats and vulnerabilities, and take steps to mitigate or prevent them before they can cause harm. It also requires a commitment to ongoing learning and improvement, as the risks facing our organizations are constantly evolving and changing.
To stay on top of these risks, it’s important to develop a comprehensive risk management strategy that takes into account all potential scenarios and factors, and to regularly review and update this strategy as needed. By maintaining a constant focus on risk management, we can help ensure the long-term success and sustainability of our organisations, while also protecting ourselves and our stakeholders from potential harm.
RANDY PAUSCH
It’s important to recognize that managing risk is not just about processes, procedures, and systems, but it’s also about the people who are involved in the process. By involving all stakeholders in the risk management process, and making it an enjoyable and engaging part of their working lives, organisations can create a culture of risk awareness and responsibility.
To achieve this, we have outlined 11 tips that organisations can follow.
