In a followup exclusive with StrategicRISK, former chief risk officer for Scentre and Westfield, Eamonn Cunningham shares his tips on implementing a new Strategic Risk Management system
In your first year as a risk manager in your new firm, you might simply work with the business to run the “risk ruler” over the emerging output of the strategic decision-making process.
But in your second year and each thereafter, Eamonn Cunningham suggests you start pushing to move further up the food chain, ideally (if possible) into the decision-making room. If you cannot get into the room, that year, make sure you influence the thinking of those in the room.
As each year goes by you need to entrench SRM further. Here are some of his top tips for success:
1. Take great care in choosing whom you partner within this process. People do need to think strategically in order to contribute to the discussion of Strategic Risks. A Harvard Business School Professor said that some executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else.” So if you cannot describe your strategy, how can you have a focussed view on Strategic Risks? Therefore choose the right people,
2. The Black Hat Approach - encourage executives to work with their own teams to develop strategic insights (and Risks for that matter) then stress test them by always having someone play the contrary view, the devil’s advocate or Black Hat for each initiative,
3. Just like the approach to strategic planning, with strategic risk management, you need to regularly reinvent the ‘discovery’ process. If you simply stick each year to the process you applied successfully last year, your incremental gains will diminish. The influences on the company, in seeking to achieve its Strategic objectives, will change all the time. So your approach to capturing them must also change.,
4. Have the leadership team engage in a strategic workshop to articulate and prioritise the key questions that the company will have to consider in the next three to five years,
5. Ask the leaders of the business units to identify the most important questions that the senior management. What you are promoting here is insightful thinking,
6. As a general rule, organisations that engage a broad group of internal and external stakeholders, in their strategic risk process, yield better results,
7. Be as diverse as you can be in selecting the people to be involved in this process. Watch out for the ‘follow the leader’ syndrome or groupthink. Independent minds are what is needed here,
8. Provide feedback to those involved in the process, to keep their interest level high,
9. You need to tweak the process to suit your organisational structure,
10. Make sure that, as you expand the number of people in this process, communication is clear,
11. Get the CEO to send a message to all concerned, that in identifying strategic risks, everything is on the table,
12. Finally, get people to think outside the current, so-called norms of existing geographies and industries. Given the current spate of disrupters out there, for example, UBER and Airbnb, everyone involved needs to look at this with a completely fresh approach.