Risk management implementation projects can be very challenging. But, when they are done correctly, they deliver results that can raise your organization to an entirely new level of performance.
My prior post discussed some unreasonable expectations for your implementation project. This post talks about the flip side — you need to set high expectations in some areas.
Risk management should provide more than lists and graphs – it should provide organizational insights
Risk management should provide value. The value isn’t necessarily embodied within a particular list that it might generate. Instead, the value is in the overall knowledge that it provides about the organization. The very process of implementing risk management helps drive a thought process that steps away from the day-to-day and focuses on the strategic and the “what-if”.
The risk management process naturally includes a need to understand which goals and risks are more impactful to the organization. Clearly, the most impactful goals and risks should receive a greater share of management’s attention. This process of thinking about goals and risks in this manner leads to the natural process of thinking about which actions, deeper in the organization, directly support these most critical goals. As an example, an organization’s highest goal may be to improve its customer service image. As this goal cascades through the organization, a low level risk of “Customer service representatives fail to reasonably satisfy customer requests” may be seen as one of the most significant risks to the organization – perhaps a much greater risk than those risks that might be attached to other top level strategies.
Limit executive leadership’s involvement to specific points
There are specific points in a risk management implementation project where executive leadership must be involved. This includes establishing the organization’s general approach to risk management, determining the scope of the implementation project, and identifying how the resulting information should be organized to provide practical answers.
However, once these foundational steps are done the project manager, along with the sponsor or liaison, should be able to proceed independently and methodically with gathering knowledge and data. This is done through interviews and discovery at varying levels throughout the organization. Interviews at the top level must, of course, include executive management. However, when the project is proceeding through lower levels of the organization executive management simply needs to monitor the progress (as with any project) and provide periodic insights and feedback.
Expert outsiders can provide immeasurable help
This expert help is seen in a few specific areas.
First and foremost is the value of experience in defining and managing the project. Someone who has experience can provide options for what risk management realistically can, and cannot, provide to an organization. A third party can also help maintain a focus on the project so that it doesn’t get buried underneath day-to-day urgencies.
Second, expert outsiders can help identify the risk environment in certain areas of the organization. This is especially true in areas with a specialized knowledge base. It can be very beneficial to have a third party help minimized ‘group-think’ and assure that the total risk environment is being considered.
Collected data can be used in many ways
Risk management expands data about the organization. This new data is necessary to answer questions that could not have been previously answered. It needs to be structured so that new insights (such as those that come along with periodic updates to risk assessments) can be captured over time. But the additional knowledge needed to specifically answer “risk” questions can also be used in other ways.
A critical feature of risk assessment activities is the need to understand which activities and risks have the greatest impact on the organization. As this information is collected, it is typically aggregated according to the unit or person who ”owns” them. This new knowledge about individual goals and activities can be used to enhance an organization’s overall performance management and goal-setting process.
Perhaps the greatest benefit from implementing risk management isn’t “risk management” specifically, but how the data and the knowledge round out the overall management and decision-making capabilities.
Risk management has the ability to deliver profound insights into an organization. Management can use these insights to dramatically improve its ability to achieve its goals. These past few posts have discussed ways to assure that your implementation project has a good chance of successfully adding value and setting a foundation for an effective on-going risk management environment.