An increasingly complex future requires a different perspective to risk management, writes vice president of mergers and acquisitions and corporate strategic planning at StarHub, Ryan Tan
The business landscape is becoming increasingly complex, with countless interdependencies and an increasing velocity of change. New and existing stakeholders are interacting in environments with multiple opportunities and risks.
Effective enterprise risk management (ERM) is about understanding this dynamic environment and synthesising the most relevant information for the attention of senior management. Indeed, risk management can no longer be conceived and implemented in isolation. It is a multi-disciplinary function within the modern corporation.
The velocity of disruptive change has gained pace, and will only accelerate in the future. Large, traditional industries are being disrupted by smaller, more nimble outfits that can execute quickly on new ideas. Given this new environment, risk managers may have to train themselves up in different ways.
Beyond just guarding against downside risk, a mature way to look at risk management is by viewing ERM as realising real opportunities to add value to one’s company. In line with this, the modern risk manager will need to embrace a ‘growth mindset’. This entails going beyond guarding against downside risk. It centres around thinking about the organisation’s vision, mission and drivers of value creation, and then considering the forces that are going to both enable and threaten that in the future. Risk managers then need to consider the logical steps to guard against or facilitate these changes in their risk mitigation plans.
From conversations I am having with my peers, I know that risk management is already evolving toward a multi-disciplinary function that is used to both protect and create value. Far from being a siloed corporate function, risk managers now are spending more time thinking about how they can adapt and realise value for their companies and functions.
Given the complex environment and diverse skill set required of risk managers, attracting young talent is critical. We need to be better at communicating that risk management is not a boring function that involves sitting in the corner of a corporate worrying about potential calamities that might arise. On the contrary, I view it as a dynamic, effective way to start learning about an industry. It is also a platform that allows young risk professionals to be deeply involved in strategic conversations around creating value for an organisation. The bottom line is that the risk management function is a great introduction to an industry and company, regardless of whether or not you want to be a risk manager in the long term.
As leaders in risk management, we need to lead from the front and inspire these young people. We can do so by successfully elevating risk to a strategic level in our organisations. We also inspire them to give their best when we seek out, understand and incorporate their views into our risk management conversations and frameworks. When our colleagues and boards see positive impact is created, then younger talent becomes inspired and attracted to the risk management profession.
Don’t forget that younger talent often possesses different perspectives that are valuable. My younger colleagues see things in different ways to me, and I am sure that they are agile in ways that I am not. This is neither good nor bad; they simply have different perspectives because of their backgrounds and experiences. When harnessed in the right way, risk management leaders can turn these perspectives and energy into valuable assets for an organisation.