Tag Archives: risk leaders

10 Building Blocks for Risk Leaders (Part 5)

Important things in life are not easily reduced to 10 steps. Nevertheless, this series provides a list of 10 building blocks to achieving long-term success in risk management from someone who has spent more than 25 years striving to carve out the most satisfying career possible, while never losing sight of the attributes attached to the bigger picture. Part 1 is here, Part 2 here, Part 3 here and Part 4 here. This is the fifth and final part.

9. Advance the Profession by Finding or Creating Personal Vision

The concept of innovation is directly and explicitly tied to risk and risk management. Put simply, there is no innovation without risk. Part of this paradigm is taking personal risk to move the discipline forward to places others may not have imagined. In the realm of risk management, settling for the status quo is to be avoided at all costs . Nothing stays the same for long, and a core competency of a true risk leader is having the gumption to push back on owners, which sometimes means questioning authority.

Just as the overall business environment is ever-evolving, the myriad internal and external drivers that can affect the risk profile of organizations must be carefully monitored. It is in this monitoring where the willingness to challenge conventional thinking and the status quo can lead to change, and risk-taking behaviors can be shifted to be more in line with risk appetite and tolerances. A vision for more innovative processes, tools and techniques can be developed, as well as an enhanced view into the murk of risk itself. Importantly, this demonstration of risk leadership will lead to the evolution of risk leaders’ personal vision for more effective risk management for their organizations.

If we haven’t learned anything else since that fateful day on Sept. 11, 2001, we’ve learned that new risks emerge with increasing regularity and seem to have increasing relevance to enterprise success. Furthermore, these new and emerging risks often fall into the strategic category, so they are often not easily measured or mitigated. All this speaks to the need for continuous improvement and innovation in how risk management is practiced and how it affects the design and execution of the organization’s risk framework and model. While personal vision for risk management is necessary — for personal satisfaction and the long-term success of the firm — no two frameworks or models are exactly alike, just as no two firm risk profiles are identical.

By crafting risk strategy, framework and model around the continuously evolving needs of the firm, risk leaders’ vision for risk management will take shape. As it is successfully implemented, this vision will also drive the risk profession forward, through benchmarking, networking and professional external collaborations, allowing all risk practitioners to improve, as well. This is the perfect segue to the last element of a personal risk leader success profile.

10. Give Back

Giving back to the next generation and to communities and nonprofit organizations (some of which can’t afford the cost of risk expertise, e.g., churches and civic organizations) is essential to developing a well-rounded leader and person. But giving back goes well beyond even service to the community and to nonprofits. In the larger context, giving back includes various strategies to help others. Examples include employing interns on a regular basis and taking the time to coach and mentor them well. Too often, intern programs are mismanaged or even abused as sources of raw labor out of which no real development or education occurs. This destroys the attraction to enter the risk profession. Because these programs—done well—can be the source of exceptional talent, it behooves all risk leaders to take advantage of intern sourcing when feasible and include it as a key component of long-term resource planning.

Giving back is also accomplished by bringing the risk leaders’ considerable knowledge to various forums, such as at conferences and industry meetings, through presentations and participation in efforts to discover new solutions to problems. While the primary goal should be to help others, it almost always includes mutual benefit. Many of my colleagues say they actually get more out of this effort than they put in. That has certainly been true for me.

Another example of giving back is the Spencer Educational Foundation’s Risk Manager in Residence Program. This program provides funding for risk experts to bring that expertise into higher educational institutions through a series of lectures and teaching done with the collaboration of selected professors whose goal is to bring diverse experiential learning to students pursuing risk and insurance degrees. This program has been instrumental in highlighting for students the opportunities available in the risk discipline.

There are many opportunities to serve other organizations through volunteer board and advisory positions, where risk experience and expertise is made available to help these organizations, particularly with risk governance. A residual benefit of this activity is broadening the network of contacts and relationships outside the industry, where a clear demand for risk expertise is almost always needed, but infrequently recognized or acted upon.

Last, but certainly not least, is the ever-present opportunity to mentor and coach others to help them achieve their career goals. This is a fundamental responsibility of every manager of people. But it really gains traction with others when those outside the immediate work circle ask for mentoring or coaching, as they recognize and value the deep and broad expertise they can learn via a mentoring program. Usually accompanying that is a keen understanding of the political, social and cultural aspects of work life that those with less experience often find challenging to navigate. One benefit of this activity is a deep and lasting gratitude that is too infrequent in day-to-day business interactions. The related personal satisfaction is often immeasurable and certainly lasting. Personal brands are enhanced, and those being mentored can close the loop on what a true risk leader profile looks like.

Conclusion

There you have it—my list of 10 building blocks for long-term success in risk management. All functions need great leaders to achieve high performance, and risk leaders have more than their share of hurdles to overcome in the process. And yet, those who stick their necks out and take the personal risk associated with doing extraordinary things often succeed in doing so. I urge you to think big about the possibilities of a career in risk and consider these 10 important things that can help define the correct path to take.

After all, no risk, no reward.

10 Building Blocks for Risk Leaders (Part 4)

Important things in life are not easily reduced to 10 easy steps. Nevertheless, this series provides a list of 10 building blocks to achieving long-term success in risk management from someone who has spent more than 25 years striving to carve out the most satisfying career possible, while never losing sight of the attributes attached to the bigger picture. Part 1 is here, Part 2 here and Part 3 here. This is Part 4 in the series.

7. Developing the Bench

While all managers are expected to develop their employees, this aspect of management is harder in risk management than in many other disciplines or functions, if only because of the often smaller teams. But getting the right bench strength established is essential to getting the risk management fortified for the hard times that will inevitably arise. The right bench will also improve the chances of sustained success.

Just finding great people is hard enough. In the risk management world, keeping them can be more challenging for a variety of reasons, including limited upward mobility because of the small team size. However, there are ways to deal with this limitation. For example, GE is well-known for running talented managers though the audit function, where managers have opportunities to gain a broader and deeper understanding of what makes the business tick.

Taking a similar approach with risk management accomplishes the same goals and argues for a regular rotation of talent through both risk management and operations. This allows talented people to be exposed to other leaders and their functions, perhaps opening doors of opportunity. Doesn’t that detract from developing long-term risk leaders? At first blush, it may look that way. In reality, the approach furthers another goal all risk leaders should have; namely, to make every employee into a “little risk manager” for the specific risks for which they are accountable.

While the actual direct report bench of the average risk department will often appear shallow, it can be deepened by considering all employees as a part of the risk team and emphasizing risk stakeholders who can be rotated through risk management to help build a risk culture. Be sure to consider vendor/supplier partners to be part of the team. As we’re all in the risk game together, it behooves every risk leader to look at teams in this broader, more inclusive fashion.

Finally, don’t forget interns. Many view interns incorrectly, as a drag on an already small team, requiring time-consuming training, coaching and direction that fully trained employees may not. Others think interns are only good for mundane tasks and end up underutilizing their skills. But if there is a good intern recruitment strategy—recruiting from the “right” schools and presenting an attractive case for why students should intern in risk management—great interns will be discovered who can materially contribute to the success of both the team and its mission. The key is to not think of them as “temps” but as those who lend themselves to being developed over time for full-time roles. This approach will demonstrate commitment to a solid intern program, which in turn will attract the best and the brightest and broaden the recruitment and team effectiveness strategy.

8. Supplement Value Preservation With Value Creation

While protecting and preserving is job one for risk leaders, the bigger opportunity is helping others understand what it means to exploit risk for gain. This is a foreign concept to many because they don’t think in terms of risk when they’re stress-testing a strategic plan and its component parts . Therein lies the tremendous opportunity to find a way into the planning process, by helping planners make this connection, and understanding the relationship between risk and success.

Because every risk represents the possibility of failure for organizations, the ultimate challenge for all risk leaders is getting a seat at the planning table, to educate, inform and contribute to the thinking of those charged with plan development and measurement. Don’t be fooled into thinking , however, that acceptance in this realm is a slam dunk. Just as the value proposition for enterprise risk management has been difficult for many to articulate and sell, so planners are naturally skeptical about allowing risk managers to participate directly in their process. Part of this reluctance comes from the reality that, in many organizations, the C-Suite is not sold on risk management as a strategic contributor to helping define success for the enterprise. This stems from the dated perception of risk managers as “just insurance” managers. But, as entrenched as that perception may be in many organizations, it is changeable. That is the challenge.

Central to changing this perception is helping educate key management on how risk can and should be leveraged for gain—the upside of risk. Every risk leader needs to educate and make organizations more aware of risk “opportunities” and be willing to take the personal risk associated with doing so. This personal risk is one reason many risk leaders have not evolved into the strategic advisers that can be the pinnacle of the profession. Don’t assume that, just because someone is adorned with the title of chief risk officer, that she is actually acting as strategic adviser. Many are just high-level risk owners with accountability for some related processes, rather than truly “enterprise-wide” risk leaders.

10 Building Blocks for Risk Leaders (Part 3)

Important things in life are not easily reduced to 10 easy steps. Nevertheless, this series provides a list of 10 building blocks to achieving long-term success in risk management from someone who has spent more than 25 years striving to carve out the most satisfying career possible, while never losing sight of the attributes attached to the bigger picture. Part 1 is here, and Part 2 is here. This is Part 3 in the series:

5. Racking Up Points with Senior Managers

The points that risk managers offer up are not always creditable “points” in the eyes of senior managers. To be so, they should be tied to the things that matter most to the organization and that can be traced, at least indirectly, to mission accomplishment. In other words, what matters most is contributing to the success of the enterprise—not just reducing the cost of risk, which is the longstanding focus of many traditional risk managers. That is not to say that reducing the cost of risk is not important or that it doesn’t contribute to organizational success. It does, especially where the total cost of risk (TCOR) is a material factor in total expense. Yet, to be recognized as making a significant contribution to the success of the enterprise, risk management practitioners must find a way to connect more directly to the successful delivery of strategic priorities, by supporting the objectives that underlie them. It’s about putting the right points on the board and, as a result, being seen as more relevant to strategic imperatives.

This is often easier said than done. Among the challenges are questions about whether the risk management employee has the qualifications and expertise to successfully contribute. The risk management employee often faces retorts like these: “Don’t we already account for risk (often called business challenges by planners) when we set the plans?” “This risk input is not translatable for purposes of plan development and is therefore not helpful.” “There is no time to conduct the assessments and measurements of relevant risks that would allow risk inputs to be properly considered.” “Our C-Suite sees no substantive reason to open the process up to more contributors when time is often of the essence and the dialogue is reserved for only the true strategists in the enterprise.”

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The chart above, from The Global CFO Study 2008: Balancing Risk and Performance Within an Integrated Finance Organization, reflects that risk managers, even chief risk officers, are perceived by chief financial officers as more tactical in mindset than strategic.

Never fear: Perceptions can be changed .

This article is not intended to provide all the answers to barriers to entry and success in collaborating with planning. However, it is intended to emphasize the importance of this collaboration and the critical need for all risk leaders who aspire to true relevance and influence to spend the political capital necessary to knock these barriers down or at least minimize them. The bottom line is that the only reason corporate goals and objectives are not met is that one or more risks have not been properly identified and managed. That makes risk management a critical component of organizational success.

6. Establishing Yourself as Essential to Others’ Success

Risk management stakeholders can’t succeed without the right risk strategy and, most particularly, the right risk leader who understands their priorities and knows how to build relationships of mutual benefit. And, risk leaders can’t succeed without successful stakeholders. Unfortunately, relationship-building has not generally been a strong suit of many risk managers, myself included (early in my career). Risk employees who move out of their comfort zone will discover this is the key tactic to use in building these relationships. Staying in traditional roles is ultimately a strategy doomed to keep you in a rut.

Even when dealing with hazard or traditional risks, it is no longer possible to do the job with excellence while staying in that comfort zone. All the many forces of culture and the challenges of the business will eventually shine a bright light on risk management personnel and their contributions, or lack thereof, to the organiza- tion’s success.

While reducing the cost of risk and bringing home expense reductions is important to most competitive enterprises, it is less important for those that are flush with profits and cash. So, it is important not to get myopic about the cost of risk as a key measure of success. Consider what others things define and drive organizational success, and figure out how to connect to them.

It is only through collaborating with risk stakeholders and showing them the value that risk leaders bring to the table that long-term success will be achieved. Spend the time to reach out to stakeholders, learn their exposures and gain sufficient knowledge about how they manage these exposures and their priorities. That way, risk leaders learn when to challenge an assessment that doesn’t look quite right and can do so with the risk intelligence and personal gravitas necessary to earn confidence. By helping owners effectively manage the risks that directly affect their own success, risk personnel will be welcomed to the team as their “street cred” is established and acknowledged.

Building Blocks for Risk Leaders (Part 2)

Important things in life are not easily reduced to 10 steps. Nevertheless, this series provides a list of 10 building blocks to achieving long-term success in risk management from someone who has spent more than 25 years striving to carve out the most satisfying career possible, while never losing sight of the attributes attached to the bigger picture. The first article in the series, covering the first two steps, is here. This articles covers steps three and four.

3. Industry Background

Many accomplished risk leaders have come up through the insurance industry, from within brokers, insurers or consultants or from the myriad of industry service providers such as claim administrators, loss prevention providers and actuaries. All of these fields are valuable for providing that broad swath of knowledge that engenders long-term success. But now that risk management is evolving into a much broader discipline, under different labels (e.g., enterprise risk management, strategic risk management or integrated risk management), the question remains whether traditional insurance-based beginnings are still the best preparation for a career in risk management. Or, are there other fields that might provide better starting points?

This new risk management realm requires greater breadth of knowledge to be successful. For example, it calls for greater skills in influencing others. These types of leadership skills are especially critical because success is often a function of securing buy-in and support from senior managers and even board members. But that doesn’t mean that the traditional areas of learning and insurance industry expertise shouldn’t be pursued .

The basic tenants of for risk leaders — risk identification, assessment, measurement, mitigation, monitoring and reporting — are as applicable as they ever were for the effective management of all risks, from A to Z. Gaining expertise and knowledge in many areas of risk management is helpful to developing the broad understanding needed to provide effective risk management advice to the enterprise. Such broad understanding is gained only by spending time in the right trenches, ideally with mentors who can guide the way through politically charged minefields. In addition, time spent in audit, compliance, legal and even process engineering can provide valuable insight into areas where relationships must be developed to understand their priorities and how they overlap with those of risk professionals.

4. Getting Involved Outside the Organization

Leaders of all types do not limit their leadership abilities to only one firm. Generally, good leaders lead everywhere, and leadership skills can help move a risk manager’s interests forward. This means that, while showing leadership internally is job one, demonstrating leadership in the broader discipline or profession is also important to long-term success. Getting involved outside their own organizations allows risk managers to have leadership experiences that broaden knowledge and hone political skills. This is especially true if the risk manager’s own company provides few opportunities to develop leadership skills. Often, these developmental opportunities within the organization are reserved for a few individuals who have been identified as “high potential,” whether accurately or otherwise.

An external development strategy may be hard to execute when the work environment is particularly challenging. It is also heavily dependent on what’s commonly known as “who you know” to connect to key external entities and leaders. So, risk management personnel should consider trade and professional organization involvement, serving on key supplier advisory boards, becoming involved with entities pushing regulatory change, etc. Contributions of value with any of these will enhance both reputation and provide personal brand benefit .