My university students will tell you I’m not very impressed with the risk profession generally. This is because for more than fifty years we’ve had safety, environmental and financial disasters by the truckload and, despite the enormous amount of time and money spent on undertaking risk assessments and risk management, I seriously doubt that much of the workforce or management believe its adding real value. I’d have to agree with them in many cases.
Take a look at your organisation’s approach. If you’re like the majority of big businesses, you’re already committing major resources in this area, but that effort is spent undertaking a massive number of assessments and spending very little time on each as a result. The output is an endless stream of unsupported risk improvement actions, the majority of which will add little value or never be completed.
A few organisations have pushed through the ‘quantity-over-quality’ hurdle though and there’s genuine inertia for change, albeit far from critical mass. My objective is to help those that want to go to the next level.
My approach is simple and can be summed up in eight dot points:
- Risk management is a means to an end, not a product in its own right.
- All improvement actions should demonstrate how they increase profit or reduce workforce / social harm. (i.e. Quantification of risk)
- The ability to aggregate risk across the business and interrogate individual risks is essential.
- One process fits all for the entire business irrespective of risk type.
- A two tier system with rapid screening and in-depth assessment in order of risk priority is the practicable solution.
- There must be clarity of what to monitor / audit to demonstrate governance.
- Integration of risk management into business planning and performance reviews makes it live.
- No additional commitment of resources over the status quo – it’s not necessary.
The approach I recommend not only conforms to ISO 31000, ASX Principle Seven and other global standards – it genuinely delivers on the intent behind the words. In doing so it supports all levels of management in good decision-making and offers an auditable demonstration of good governance at both Board and Executive level.