Traditional risk management tools are limiting the effectiveness of risk management and holding the risk management profession back, says Patrick Smith, managing director, Acumen Advisory.
Speaking at StrategicRISK’s sixth annual Risk Forum Hong Kong, Patrick Smith, managing director, Acumen Advisory and global business resilience consultant, Deliveroo said traditional risk management tools, such as heat maps, are only useful for making a business case.
“Don’t make tools the shop window in risk management. I am not saying risk management is broken. I am just questioning whether it is suitable for a world that is changing daily,” said Smith.
The big challenge for many CEOs, said Smith, is that they know there is a need to change and diversify the business model, but there is a need to support the “big bet” decisions.
“I don’t think we are far away from being relevant to a CEO. As a risk management profession, we have got a bit carried away with our tools. I don’t think anyone else cares unless it sparks interest. Our sweet spot as risk managers is finding what is relevant.”
Smith said changing risk management will do for the profession is to make businesses more resilient in the future.
Smith noted it is important to centre risk management conversations with the business around money, stakeholder expectations and reputation and the impact these will have on the business.
“I tend to try to use my ears instead of my mouth to risk management. Always remember to speak the language of the business. Learn it and use it.”
Smith stressed to delegates that the key to new thinking in risk management is about linking risk management and strategy in the business.