If the current global pandemic taught us anything in 2020, it is that being risk aware is now a necessity for business leaders – to avoid a disastrous downfall into non-existence.
A top-down, bottom-up risk aware culture is a solid way for any business, regardless of industry, to inject risk management processes into all levels of the enterprise. When all in the organisation act as one when it comes to identifying, assessing and treating risks, sustainability becomes a certain in this uncertain world.
To build an appropriate culture you need changes in human behavior. Employees are the lifeblood of any business and play a direct role in constructing the culture of the organisation.
One study found that companies with winning organisational cultures have 72% higher employee engagement ratings than those with weak cultures. Moreover, 38% of employees reported a desire to leave their current jobs, due to a negative company culture or feelings of not fitting in. A company with a poor culture, especially in the age of social media, can find it very difficult to maintain a positive brand and also to attract top talent to their business.
With internal culture being so critical to the overall success of any business, it is puzzling to see why building a risk aware culture has been such a difficult task for risk professionals on a global basis.
A risk aware culture is one where employees at all levels of the enterprise engage in utilising risk management methodologies to improve decision making processes, decrease frequency of adverse events, protect the company’s brand, and create a safe environment for external stakeholders.
Break Down Silos
Business silos are an enemy of Enterprise Risk Management. Decentralised risk discussions with no clear communication channels to upper leadership is a futile exercise that does not yield any significant value.
A risk aware culture will help break down these business silos that siphon off valuable risk information from reaching a centralised depository where it can be assessed, and resources allocated to start mitigation efforts.
Once information is free to flow throughout the organisation, decision quality can improve as risks that can cause future problems are known and can be worked around to produce desired outcomes.
Ride the Wave of Change
2020 was all about organisations modifying the way they achieved business success. Since countless businesses remain in this “change phase” it has become normalised and not unusual. Change is now common.
Business leaders must drive this new-normal of change. A risk-aware culture that fosters discussions on risks at all levels of the organisation creates positive risk transparency. Unknown-unknowns becoming known through visibility across the enterprise.
What new and additional risks are the IT division experiencing with new cyber threats?
How is supply chain keeping goods flowing during these challenging times?
Is the business experiencing new issues with retaining talent?
A risk aware culture brings these questions on risks to the centre stage, where they can be discussed by risk owners to ensure changes are made to create tolerable levels of adversity while exploring new opportunities that risks can expose. Risk transparency also illuminates any interconnection of risks that can impact multiple segments of the business, allowing more efficient use of resources deployed as part of risk treatment strategies.