Risk Management - The process ran aground
Do you recognise this situation?Many organisations, including perhaps your own, started out their implementation of risk management with energy and enthusiasm. However, we find that many of our customers, despite their good intentions, have trouble maintaining this energy. Line management often considers risk management a bureaucratic hindrance. Yet another task they get stuck with. Line managers find it hard to see the added value of risk management.
We received the following question
A semi-governmental institution experienced such difficulties. The Supervisory Board wanted to know what exactly the Management Board was doing in terms of Risk Management. “Not a lot, actually,” was the unsatisfactory answer. The Control department was asked to fill the gap. Together with an external party they organised a large number of workshops, including one with the Management Board. But Line management was not happy. After long sessions with voting boxes they were often left wondering ‘so is this it?’ Doubts were not always voiced, and when they were, they were not always taken seriously. When the Management Board had to make an assessment of three hundred selected risks and the chairman could not find his three most important ones on the list, the project was put on hold. ACS was asked to revive the project.
We approached this question as follows
The approach was characterised by the following elements:
- The analysis of the risks by the Management Board was integrated with the drawing up of the annual strategic agenda. A Delphi survey among independent experts was used to outline the ten main threats arising from the objectives. The Management Board was then asked to indicate to what extent these risks as assessed by the external experts were at that point being managed.
- At lower levels, too, the risk analysis was integrated into the planning and control cycle. The number of risks to be assessed was reduced significantly and the updating of the risks profile became a fixed part of the quarterly meetings with the Management Board.
- The controllers that were responsible for the implementation were trained in the organisation of workshops and the questioning of managers. This training also paid a lot of attention to the bias that may arise when estimating risks and making decisions about this in groups.
This yielded the following result
Introducing expert opinions added new, valuable knowledge to the Management Board’s strategic decision-making process. They considered this a clear added value of Risk Management and thus became much better champions for its implementation in the rest of the organisation. Getting Line Management to move again was much harder. Motivation was still below par in places. However, the Line managers do indicate that they are now taken much more seriously.