Once credibility at a firm is lost, a risk manager’s role can become an arduous one to fulfil
One of the biggest challenges facing risk managers today is losing, or failing to gain, creditability within an organisation, according to two risk industry experts.
While risk managers play a vital role in firms, the validation of their contribution can be understated and at times marginialised.
“One of the major challenges facing risk managers is that issue of creditability and authenticity,” Kevin Bates, group head of risk and insurance, Lend Lease and president of RIMS Australiasia, told StrategicRISK.
“Risk management is one of those roles where you do not have a huge amount of direct and obvious power in an organisation, but you have to be a massive influencer.
“You probably get one fail within your organisation and if you do it a second time, not only have you personally lost credibility, but your function has lost credibility,” he said.
Bates stated that there are a lot of risk aspects across Australasia which have become risk reporting functions rather than risk management functions.
“This is because the risk manager has missed their opportunity to prove themselves and you then find the C-Suite of an organisation thinking they can manage risk better as the risk manager has proved themselves to be incapable,” added Bates.
Eamonn Cunningham, former chief risk officer, Scentre Group and board member of RIMS Australasia, agreed with Bates’ view and added that the backdrop to that concern is the current economic landscape.
“For example, in Australia we have low consumer confidence, very moderate growth and a strengthening Aussie dollar which is harming trade,” Cunningham said.
“That all results in moderate growth for organisations, which means that CEOs and CFOs start looking at cost rather than topline revenue, therefore it is asked ‘who is not contributing?’”
Cunningham said risk managers are too often just seen as a cost function aligned to compliance, audit and governance.
“Senior executives often don’t see the upside of risk. They just see risk as downside protector,” he added.
Bates and Cunningham were speaking with StrategicRISK ahead of the launch of the RIMS Risk Forum Australasia taking place in Sydney on 29–30 August 2017. For more information about the event visit https://www.rims.org/RiskForum/Australasia17/Pages/Home.aspx
The credibility factor: Eamonn Cunningham’s top five tips for risk mangers to avoid losing their credibility
1. Know your organisations business inside out. Have a very good appreciation of how the various departments interact with each other. There are very few people in the company who will have this overall perspective. The risk manager should seize this opportunity and expand his/her knowledge of the business and how it operates.
2. Use the knowledge gained above to sound credible when interacting with your peers and those above you in the food chain. Demonstrate the respect they deserve by displaying that you have done your homework. You will in turn get that respect from them as well as a more engaging conversation.
3. Have the courage to call something out if you believe the wrong decision is about to be made. Back your own judgement and put your hand up rather than biting your tongue and saying nothing.
4. You have to earn your stripes in the credibility stakes. You don’t get that status of trusted advisor handed to you on a plate. Build your credibility by getting quick wins or runs on the board. These wins must be truly relevant to the organisation. If they are perceived otherwise, then despite all your efforts, you make run the risk of being consigned to the ranks of being regarded as technically great but impractical.
5. Change your language from No this cannot happen, to what do we need to do to make this work for the Company.