Join our risk management community to discuss the changing importance and role of risk management. This is the role of the Risk Management Futurist.
Protecht – Redefining the way the world thinks about risk.
A futurist’s role is to help shape the future of something (risk management) in order to make it more relevant and valuable based on:
Here lie the two key challenges for risk management.
We all understand and appreciate that the risk management profession can do better to serve the needs of today. The development in risk management practices and capabilities over the last 20 years has been rapid and profound. The focus of the global banking regulator in 1998 on operational risk management provided an impetus for huge investment in operational risk management in that sector and this kicked off a growth spurt for the next 23 years.
The discipline, at best, is therefore a young adult and having a teenager myself, they can be frustrating, difficult to understand and sometimes it’s hard to see the value add! Sounds familiar? As with a growing child we have to be patient, allow mistakes to be made and mature to the occasion. I believe the risk management profession is doing that and taking a futurist view can only help that journey.
There are many critics that seem to take pleasure in pointing out all of the things that are wrong with the profession. This is a shame. If they used their energy instead on sharing their vision for the future and aiding the profession to develop, we would all benefit far greater.
In addition, we can only mature as fast as our audience and customer (every employee in an organisation) matures. Our customer has to be brought along for the journey otherwise we will leave them in our dust and the profession will become equally as irrelevant by being out of touch with reality. It is a delicate balance.
So firstly to addressing a few of the current shortcomings to help form a view of the future.
Risk Management is often still focussed on the management of risk, in its own right. Given that “Risk” is the effect of uncertainty on objectives, risk and objectives should be inextricably linked. The risk management and strategy functions should be “best friends”. Risk Management should feed directly from strategy.
The future should see a much stronger linkage between risk and strategy and a focus on “Outcome Management” rather than “Risk Management”.
Risk Management is often positioned as a standalone siloed function, somehow separate from the rest of the business. The importance of risk management is often hard for other parts of the business to realise as it is a department that is often seen as producing monthly historical risk reports and providing little forward looking value. Risk Management should be an integral part of the management process. For many “Risk Managers” our ultimate goal should be to “do ourselves out of a job”. At that stage you would have achieved integration with management.
The key role of an integrated risk management function is to:
Risk Management should not sleep until “Everyone is a practising Risk Manager” and Risk Management is accepted as a normal part of Management.
Risk Management will no longer be the sole domain of risk committees and boards, it will be an integral part of each employee’s day to day life.
Risk Management is, or should be, an integral part of everything an organisation does. This means that:
This leads to the high probability that the role and significance of risk management will change as well as how it is delivered and integrated into the day to day operations of organisations.
Taking a look at two of the potential key themes for the future:
Risk Management needs technology, technology needs risk management! This relationship will undoubtedly dramatically shape the risk management of the future. The key focuses will be most likely be:
The major impacts of these technologies will be that Risk Management becomes more real time and relevant to a much wider audience, making the importance of risk management more readily apparent. It will no longer be the sole domain of risk committees and boards, it will be an integral part of each employee’s day to day life.
Linked directly to technology is the revolution in data. The “big data” wave did not really yield the revolution we expected as finding the use cases for the data so we could create intelligence was harder than first thought. However, in the risk field, the potential range of useful data is almost endless. The wide range of risks we face give produce enormous amounts of indicator data which if transformed into intelligence and used correctly will provide a much more leading and proactive view of risk, so giving us time to make much better proactive decisions.
One wonders if all of the data available for the development of COVID-19 was captured and used for a more immediate response that we might not be in the reactive firefighting situation we are now.
How to get more intimate with your Risk Controls
Controls are usually not well understood or managed.This often leads to a control framework that inadequately addresses risk, is not effective and is costly to manage and maintain.
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Risk management will need its data scientists in order to determine what data is and is not useful and how that useful data can be turned into intelligence which can then be used for a more proactive approach to risk management.
As the Director of Training and Research at the Protecht Group, the future of risk management excites me. The Protecht Group’s tagline is “Redefining the Way the World Thinks about Risk”. This is more than a stale marketing ploy, it defines everything we do. Risk Management is still fairly immature and is far from perfect but the past 20 years or so of development in the risk management field should be celebrated. We should however not sit on our laurels but keep pressing for the right future for this wonderful discipline of ours, Risk Management.
For that we need your help.
The Protecht Group is facilitating a series of complimentary bi-monthly Risk Management Futurist meetup webinars. Join us as we cover a range of topics from Opportunity Risk Management to using Artificial Intelligence to measure risk culture and everything in between.
Click below to register to the sessions and express your interest in presenting your vision for the future of risk management.
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