I think this image says so much about decision making, risk management and performance. The ocean race, or business or life, is not about “avoiding risk” but managing it. We can’t always choose the weather, but we need to make best decisions to navigate the prevailing conditions to reach our objectives in the fastest time (lowest cost) achievable whilst keeping safely within the parameters we set.
Think “Risk Informed Decision Making”.
We held a lively webcast discussion on the need to embrace Enterprise Risk Management (ERM). We discussed the demands, challenges and strategies for success with ERM. We talked about the impact of continued dramatic shifts in society and business, that directly affect business outcomes, business decisions and thus risk management.
We discussed the impact of the fundamental structural changes and disruption outside our control, in society, markets, customer and consumer behaviour, supplier and partner ecosystems, investors and employees. The consumer “awakening” is something that is affecting all businesses with convenience, intimacy and transparency becoming “table stakes’ for any organisation. We discussed technology, transparency of data, digital transformation, end-to-end process integration in businesses, and the role of automation in decision making. We see ever increasing demands on leadership for lower cost, reduced cycle times, fewer negative consequences whilst driving increased return on investment, value, speed, impact, agility, resilience and transparency. There is a growing scrutiny of the “How” as well as the “What” in business, so financial results no longer trump all other cards. It’s now a team game, supply chain partners, distribution channels and ecosystems matter. The need for a balanced approach to both threat and opportunity, risk and performance is key. OCEG coined a welcome term, “Principled Performance”. This is what we all strive for.
“Risk management “ is no longer just about managing things we can control, but also dealing with things we can only influence. Many of these are outside the boundaries of the organization. We talked about the categorisation of risk, in ways that span organisation silos. This isn’t a hierarchy. It is a network of risk and opportunity.
As well as taking an enterprise-wide view to understand the linkages across the organisation, ERM needs to be forward looking and not just reviewing what has passed. We discussed the idea of “risk to decision” cycles, “Fact to Act” and the concept of “Risk Informed Decision Making”
We introduced the concept of a process framework for ERM which has proven to be a powerful tool for both driving executive understanding and cross functional alignment, as well as dealing with the key issues that drive successful change management.
We discussed some of these key areas including many personal stories from 2 decades of expertise in this field. We discussed the need to understand the “playing field” before getting into the concrete topics of the “business risk model”, risk taxonomy, process design, technology exploitation and best practice change management, education and training concepts. We talked about “Risk Ownership” as well as “Risk Oversight” and shared some great examples of how these can be supported with a “Single Source of Truth”.
We talked about ERM as a journey towards “risk informed decision making” as a process, not just a project.
We shared insights and a model into thinking about business value, adoption and change.
The key focus of ERM must be towards a forward looking, business decision-oriented process. Less rear-view mirror and more looking ahead, alert, through the windscreen.
You can get the full story by watching the webcast itself here
Thanks for reading!