He doesn’t like to admit it, but my husband loves, and I mean LOVES, his routines.
That’s not to imply he’s stuck in a rut, quite the contrary to be honest.
Nevertheless, while he can and does adjust when needed, he also loves simplicity and the expected in his day-to-day life.
Believe it or not, there’s a corollary between my husband’s personal habits and today’s topic. Promise.
We talk a lot about how much risk should be integrated or incorporated into daily decisions, but as is often the case, this is much easier said than done, especially for those ad-hoc (unexpected) decisions that inevitably come up.
Why?
Because contrary to my husband’s fondness for his routines, the ad-hoc decisions we’re talking about have no tempo or routine.
We can easily predict when strategic planning will occur and, therefore, the times to incorporate risk into the planning and subsequent execution of that strategy.
It’s also easy to predict the tempo or routine of the business’ daily operations, so identifying and analyzing risk(s) to the organization’s mission-critical business objectives isn’t that big of a hill to climb.
There’s a third area – those unpredictable, ad-hoc decisions about any number of topics under the sun where a risk lens would be helpful. The problem is processes are simply too time-consuming and cumbersome to be of much help, especially when they cling to formal standards.
An example of this kind of situation goes something like this:
A CEO of Company JKL approaches the CEO of your company, Company RST, out of the blue; it seems JKL’s CEO sees an opportunity to partner with Company RST because it could help them both break into a new market. Hmmm… it’s a viable option.
This partnership (or new market) opportunity was not anticipated, it isn’t planned for, and it’s not part of your strategy.
BUT…
Company RST executives love the idea!
They talk amongst themselves and even ask questions about costs and what may have to be done from a business perspective.
However, risk isn’t typically asked for its perspective in situations like this.
The reason?
Well, this is one area where ERM earns the moniker of being too bureaucratic. As we discuss in a previous article on ERM moving at the speed of business, the risk manager will come in and tell everyone to pause for an indefinite period of time – a few weeks, even months – so a formal risk identification, assessment, and analysis can be done.
Think about that for a second…
How would you like someone to tell you to pause on something so it can be run through a formal process?
This dilemma naturally begs the question…
How do you take the ERM tools used for business and strategic objectives and apply them to decision-making that happens in a much shorter time horizon?
The big difference in this situation versus the routine strategic and business decisions is that insights have to be provided in real-time. There cannot be a pause in the decision-making.
Thankfully, it’s not like you’re starting off blind. You have identified risks to strategic and business objectives, so a first step along this journey is to look at what is already known, and ask:
- Is this decision going to help Company RST fulfill its mission and/or achieve its strategic goals and objectives?
- Could this decision exacerbate the known risks, and if so, how?
- Is this decision going to help address a known gap or issue?
- If we move forward with this decision, will it be taking resources that have already been allocated to address prioritized objectives and/or risk(s)?
A big reason people don’t ask these questions now is because risk doesn’t have a seat at the table.
While risk should have this seat, we’re quick to point out in previous articles that practitioners cannot force or elbow their way in, which is something I know you wouldn’t do.
Instead of forcing your way in, you have to get invited.
You do that by establishing trust and building relationships. You demonstrate through actions elsewhere that your intention is to add value and not be a roadblock or hindrance to progress.
That’s the first part (…or step).
The next has to do with culture, more specifically embedding a strong risk-aware culture throughout the organization.
You do this by enabling business leaders to ask the right questions when faced with one of these ad-hoc decisions.
This may sound a little eccentric or even old-fashioned, but one idea I’ve used to accomplish this is giving business leaders a laminated index card with important questions and urge them to keep it handy in their portfolio or tablet they use for meetings. Some additional example questions can be found in this article on steps to a speedy and effective decision.
And while a decision may not be able to be finalized in that moment, at least executives and business leaders will be able to take insights and action-items from these questions, resolve any issues, and make a final decision in short order.
A great example of this ad-hoc decision making in action occurred at the onset of the COVID-19 pandemic a few years ago. At the time, Norman Marks provided some sage advice that risk professionals could carry long into the future when he stated:
“…figure out what the organization needs from us if they are to be successful, and then deliver it (pull) instead of doing what we think is right (based on industry or professional standards) and hoping that once we “push” it at them, they will see some value.”
As I’ve stated in my previous two articles on not all risks are created equal and different sources of information for decision-making, the connection between risk and decision-making has been on my mind a lot recently.
Although these other two articles were important in their own right, today’s article is by far one of the toughest topics to tackle, because (like my husband and his routines) the routine processes are more conducive to predictable decisions.
But when you can successfully embed risk into these ad-hoc, unexpected decisions, executives will most certainly see the value and therefore become strong proponents of ERM going forward, gaining you that coveted seat at the table.
What ways have you tried to embed risk into the unexpected, ad-hoc decisions that come up?
Please join the conversation on LinkedIn to share your perspective.
If your company would like to move beyond “formal” ERM and begin harnessing or embedding risk into daily decision-making, please reach out to schedule an assessment of your current practices and options you can consider for making this transition.
Featured image courtesy of Thought Catalog via Unsplash.com