7 Risk Principles to Rock Your World

January 2008 Issue

By Diana Del Bel Belluz, M.A.Sc., P.Eng.

"It is not the strongest of the species that survives, nor the most
intelligent, but the one most responsive to change."
Charles Darwin

Risk Management is about adapting to change, elegantly. It’s about preparing for the future, not playing catch-up. As a modern risk manager, you are constantly looking to see what is likely to come at you and readying yourself and your organization to deal with those trends so that your company can sustain its competitive edge. It’s NOT about controlling risks or people through elaborate regimes of rules and oversight.

Goal setting is a great opportunity to insert risk thinking into your own business practices and those of your organization. Will your goals rock your world? The key is to ensure that your goals create both short-term value AND position you for success in future. To ensure future success, you need to develop your ability to change and adapt. And risk management is a core discipline for change and adaptation.

The topic of change and adaptation is particularly relevant at the start of the year, when most of us spend time setting goals and objectives. Are your risk management goals helping to develop change-readiness capabilities that will rock your world? Here are seven risk-thinking principles to keep in mind as you set your goals for 2008.

PRINCIPLE #1: Take time to observe

Look both within your organization and to the outside world for factors that currently (or might in future) affect your performance. What has changed in your business environment? An often overlooked source of risk ? both threats and opportunities ? is the change that occurs at the micro and macro levels in your external business environment. Know the trends and consider them when developing your goals. (See this month's Bonus Resource for an example of big trends to watch in 2008.) What is it that you want to improve – in yourself, in your organization? Are your goals focused exclusively on creating short-term value or will they also position you for future success?

PRINCIPLE #2: Balance the "methodology+people" equation

Successful risk management is a combination of discipline and culture. Efforts to implement risk management that focus exclusively on only one side of the Efforts to implement risk management that focus exclusively on only one side of the "methodology+people" equation fail. Make sure you strike a balance between both technical/structural and cultural changes you want to make this year.

A simple approach to check if your goals are balanced is to list them in two columns. Put discipline-related goals (e.g., development of frameworks, assessment tools, reporting structures, etc.) in one column and people-related goals (e.g., development of skills in communication, collaboration, influencing, selling, etc.) in a second column. If the two columns are lopsided, chances are that your risk management performance will ultimately suffer. You need both good tools AND people who know how to and want to use them.

PRINCIPLE #3: Inspire

Your aspirations should be big, bold and challenging. You want to choose goals that will make a significant difference in your ability to contribute to the organization’s performance, accountability and competitiveness. If your goals are going to inspire you and others to implement systematic risk management, those goals need to stretch people and be much more than a dry list of tasks.

When goals are truly audacious, you have to develop new capabilities to achieve them. Define what capabilities your organization needs in order to be risk wise in a constantly changing business environment. Next, identify the opportunities for innovation and creativity that will arise in the quest to develop those capabilities. Your goals need to articulate any lacking risk management capabilities as exciting opportunities for personal growth and organizational development.

PRINCIPLE #4: Respect your reality

Stretch, but don’t overwhelm yourself. Make sure your goals are doable, given the organization’s priorities, resources, and constraints. Think about the factors that do (or might) affect you both negatively and positively.

What is hindering you? What are the historic and potential roadblocks to systematic risk management in your organization? What will it take to remove or bypass them?

Who can help you? You can only succeed through others. Therefore you need powerful allies. Identify key leaders who can champion risk management and help your organization to change and achieve your risk management goals faster.

PRINCIPLE #5: Communicate clearly

You should be able to express each goal in one short sentence that anyone in the organization can understand immediately. If your goals are clear, concise and compelling, you’ll be able to infect others with enthusiasm to achieve them.

PRINCIPLE #6: Establish a yardstick

Remember, you are modelling good management here. Make sure you can demonstrate progress towards each goal by identifying one or two ways to measure your success. Make sure at least one measure is quantitative.

PRINCIPLE #7: Rinse and repeat

Once you’ve set your annual goals, you’ll want to revisit them periodically. For example, I examine my goals every quarter to make sure they are still relevant to my overall mission and vision. And when significant changes occur in my business environment, I adapt by updating either my objectives or strategies to suit my new circumstances.

The point is to make it a regular habit to check if your goals are still relevant to your business environment. And so, the cycle begins again as you return to the first risk principle in this list, take time to observe. The more volatile your environment, the more often you need to repeat the cycle.

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The Risk Wise bottom line… Apply risk and change management thinking to your goal setting. These seven risk principles can rock your world by helping you to achieve your near-term goals. They can also help you to build rock-solid management capabilities to deal with the constantly changing circumstances that life guarantees. I wish you every success in 2008 and over the long-term!

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Tell me your risk management goal setting stories. What works for you? What audacious goals have you set? Achieved? How are you positioning yourself and your organization for future success? I appreciate receiving emails with your tips and success stories at diana.belluz @ riskwise.ca

Follow the links to:

• Read this month's Bonus Resource - 8 Big Trends for 2008
• Download a printable version of the entire January 2008 issue of the Risk Management Made Simple Advisory.
  
• View the Article Index to access back issues of the Risk Management Made Simple Advisory.