Four Biggest Obstacles to Implementing your Risk Management Practice
Given the human tendency to be reactive rather than proactive, combined with the challenges of getting the different functions of an organization to work together, it should come as no surprise that risk management is a practice that requires commitment, continuous focus, and discipline.
And like any organizational paradigm shift, the earliest stages can be the hardest. We identified the four greatest challenges we’ve seen in maturing risk management practices.
1) Lack of Sponsorship
The first and probably the most daunting is a lack of sponsorship. Typically, this must come from your organization’s leadership. Without that kind of continuous support, most risk management practices stall during the initial stages. Often a lack of sponsorship occurs when leadership is pulled in multiple directions and assumes Risk Management is running just fine on cruise control.
Similarly, there can be a perception that implementing a more aggressive risk management posture can have a negative impact on cost and timely delivery of the product service or interrupt operations. One might ask, do I have additional resources to react to a situation that could have been prevented with a pro-active risk management program? Is the organization’s reputation priceless?
2) Lack of an Open Risk Culture
Another obstacle that is related is the lack of an open culture. Everyone at some point in their career has experienced the “shoot the messenger” scenario. Effective risk management can’t exist in a climate of distrust where those best equipped to identify critical risks are afraid to speak up.
The key is having timely information that communicates present and future conditions that can be acted upon at the appropriate levels. Promote and encourage open communications by seeking information from every individual involved.
3) Unreliable Data
Risk information is dynamic. Static useless data in old versions of a spreadsheet, notepads, or an engineer’s notebook is a big problem in itself. We already mentioned how important sponsorship is to your practice.
But what if everyone isn’t using the same criteria to score risk and its impact and probability? How can leadership make decisions based on data that isn’t objective and quantifiable?
It is important to keep in mind that the value of risk management for leadership is to provide data for making critical strategic decisions. Make sure the product of your risk management practice delivers reliable and understandable insights that your leadership can use.
4) It’s Difficult to Communicate Risk Enterprise-Wide
Don’t think that the only communication issues occur up and down the chain of command. Difficulties in communicating risk horizontally across an organization is another major obstacle to your practice. Someone in a financial role might see risk very differently than someone in operations, or an engineer.
Those people “in the trenches” are often the best at identifying risk, but have they had the basic training in how to articulate a clear risk statement that is understandable to the rest of the team? Do you have a common toolset and methodology that reaches across these stovepipes in your organization?
Ready for the Next Step?
If you suspect that one or more of these potential impediments to daily operations are present, it’s often a good idea to have an independent outside assessment to highlight where the issues are and suggest solutions.
Pro-Concepts has been providing risk management consulting and assessment services to the government and industry for over 25 years.
Is it now time to discuss your concerns in a confidential setting?
Call Pro-Concepts at (757) 637-0440 for your free initial consultation.