Many risk managers are reluctant to have a conversation with executives about the need to better integrate into decision making and the need to talk and think about risks systematically every day. Changing the methodology, reporting format and tools? Forget about it. Even just talking and asking for a great role in decision making gives them shivers.
Yet, this is what risk management is all about.
Talking a small risk today to have a huge benefit in the long term.
This sentence actually deserves a detailed explanation:
- Some people reading this will immediately think, hold on, the risk is not small, I could lose a job. This is a perfect example of a cognitive bias and an indicator that some risk managers are really bad at quantifying risks. The chance of being fired are so small, they are insignificant, the most likely scenario you will either get a “not now, thank you” or “do a pilot”.
- Many of you after reading this are thinking “ha, Alex, doesn’t know my company, the chances to get fired are not insignificant”. Nope, another cognitive bias.
- Here is another reality check. Not taking a small risk now is actually fatal. How will the risk manager look if it’s not him who initiates this discussion but a Board member, who heard about it somewhere (and they will, we are running massive campaigns in Russia targeted at Boards, partnering with Institutes of Independent Directors) or an external auditor? This will make the risk manager look incompetent and will more likely lead to job loss.
- But my methodology is already about integration. Is it? Is it really? Compare your approach to some of the bullets in the this article: https://riskacademy.blog/2017/01/14/first-blog-post/
- But I don’t understand how. There has been written so much about, all my staff is free. No longer an excuse. Just read the book https://www.researchgate.net/publication/323254437_FREE_RISK_MANAGEMENT_BOOK_GUIDE_TO_EFFECTIVE_RISK_MANAGEMENT_30 or join one of the free webinars https://riskacademy.blog/free-webinars/
- Finally, the benefits are so significant, ignoring them is straight up negligence on behalf of the risk manager.
I changed my approach 4 years ago. Only a hand full of people, like Grant Purdy, Norman Marks, Alex Dali, people from SDG, Doug Hubbard and few others were talking and writing about it then. The results were beyond amazing.
Now, everyone is talking about decision making. What are you still scared about? Take that risk.
Here is another anecdote. Many years ago I hosted a conference in Russia, approx 60 risk managers participated. I asked a series of questions and then gave people an option to vote. First question was “Do you think management would benefit from better risk management awareness / training?” People were asked to raise hands for yes/not. Not surprising most people voted yes. Next question was “Risk management is an important competency. Would you prefer HR to pay for it and include it in their annual training calendar?” Many, but significantly less people voted yes. I started sensing something was not right. The last question was “Who would be willing to set up a meeting between HR and a training company, that specializes on selling to HR and is really good at it, next week to make this happen, no obligations?” Less than 10% said yes. Boom!
I said – look around, now you see who the real problem is.
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RISK-ACADEMY offers decision making and risk management training and consulting services. Our corporate risk management training programs are specifically designed to promote risk-based decision making and integrating risk management into business processes. Risk managers all over the world call us in to help sell idea of integrating risk analysis into decision making and using quantitative risk analysis techniques. Check out most popular course for decision makers https://riskacademy.blog/product/risk-based-decision-making-executives/ or our dedicated programs to help risk managers learn the foundations of quant risk analysis https://riskacademy.blog/product/risk-managers-training/. We can also help audit risk management effectiveness or develop a roadmap for risk management integration into decision making https://riskacademy.blog/product/g31000-risk-management-maturity-assessment/