A potential client once said to me “Do you know what the problem is with you risk managers?” He followed with “all you seem to tell us business people is what we already know about risk, you just put it in a pretty coloured pie / bar chart!”. I thought for a few seconds and had to agree that for some risk managers this is partially if not fully true. I did follow up with “You may know it but your managers / senior executives and board might not!” He agreed and thus begun an interesting lunch which ended with him saying “when you can tell me something useful about risk in my business that I do not already know, give me a call”! That potential client is now a client!
It is easy to provide statistics on the number of customer complaints, incidents, what incidents have occurred, and other such ‘rear view mirror’ views. But the business usually already knows this and they will see little value in being told what they already know. In order to be successful in ERM, we as risk managers need to engage the business and this will only occur if the business sees value from what we can provide them. Humans respond to incentives and value is an incentive.
How can we provide value to the business from ERM? We need to provide the business with risk intelligence, something they did not already know, that is useful for them in making better decisions. What if the risk manager could provide the answers to these types of questions:
The books “Freakonomics*” and “Super Freakonomics*” provide some excellent practical insights into risk intelligence by asking such questions as:
The authors of these highly popular books, Levitt and Dubner, go on a data mining and analysis journey for each of these questions looking to understand the true causal factors to these questions. The insights they provide are intriguing and open the door to asking similar questions of our businesses. To find the answers you will need to enjoy the read which is highly recommended!
The journey from the traditional business which is dominated by historical data and focus on what has happened to one that is strategic and where risk management is an integral part of every business decision is primarily a journey from relative ignorance and lack of data, through the harnessing of relevant quality data sets to the turning of that data into intelligence. The journey is not easy and needs to be travelled in a controlled and progressive manner. The following steps are indicative of the process:
Current status. What is the status of the current business?
Data Collection
How can the data sets be used for true risk insights?
Protecht’s ERM system focuses heavily on data collection, management, processing and reporting to begin releasing the power of risk data. We are a long way forward in the hunt for true risk intelligence but understand and appreciate that we have a long way to go. The ultimate goal is for the ERM profession to be able to ask the business “We have the solution, what is the question?”
If you wish to learn more about releasing the power of risk data or how you can progress further towards true risk intelligence, please contact The Protecht Group via phone 02 8005 1625 or email info@protecht.com.au.
Get the latest thought leadership on risk, compliance, health and safety and internal audit industry trends, challenges, methodologies, and insights. You will receive notifications directly in your inbox once a month.
.png "footer-logo (1)")
