Amid the global pandemic, risk management further emerges with major attention by senior leaders all over the world. Being fully prepared for what could go wrong is what all businesses seek to capture. Risk professionals bring the necessary skills to get the right individuals to the table to discuss risks that span the entire enterprise.
A risk leader within any organisation must be a master of many trades and areas of expertise. He or she must also be a corporate diplomat possessing the knowledge and skills to bring people together to solve problems before they occur.
Risk professionals at their core must be excellent collaborators and facilitators. It is almost as if a risk leader is a therapist in his/her office covered in wood-paneled walls amid a symphony of books and business sector leaders are the ones laying on the leather covered couch. The risk managers know the questions to ask the business leaders, to drive effective risk discussions that lead to the identification, assessment and treatment of enterprise risks. In a proper enterprise risk management system, these business sector leaders are known as “risk owners”. They are the ones who are responsible for owning the identified risks within their area to then ensure they remain within their documented risk appetites.
Let’s examine some ways risk owners play a critical role in enterprise risk management by assisting the organisation in improving decision making processes and promoting intelligent risk taking.
Subject Matter Experts
Risk owners are leaders from business sectors such as IT or Human Resources, and are the subject matter experts over their respective departments.
Risk managers simply cannot be experts in every inch of the business ecosystem and thus must leverage the knowledge of risk owners to accurately identify and assess risks specific to their areas of expertise. This is a crucial benefit of having risk owners at the table when discussing enterprise risks, and they are the lifeblood of any ERM system.
Risk Information Funnels
For ERM to be successful a top-down, bottom-up approach to risk information is a requirement. A top-down communication flow must come from the CEO & Board, but the bottom-up flow of risk-related information is much more challenging. Risk owners are key to unlocking risk-specific information at lower levels of the organization which can help expose emerging risks that may not be visible at higher levels of the organisation. Once this information is collected it can be funneled up to leadership where resources can be allocated to respond accordingly.
When you make a business segment leader the title of “risk owner” it helps build a risk aware culture. This should be the end goal of any risk professional. The more employees identifying, assessing, and reacting to the risks that accompany their daily activities, the better off the company will be in the long term. Risk owners can play an integral role in ensuring accountability of employees to actively participate in building the risk aware culture senior leadership seeks. Turning risk management into a value-add process that builds competitive advantage should be a business goal.
Risk management is not a solo mission, it is a collaborative process that seeks to bring all levels of the organization together towards a common purpose, creating a risk aware culture. Risk owners are the glue that keeps the risk management sphere together. They help in addressing the true risks that exist that can turn into adverse events if not addressed and managed correctly. Risk leaders are only as strong as the risk owners they choose to assist in achieving ERM-related objectives. Be sure to choose wisely.