Risk managers must remove blinkers to overcome fragile systems

She urged the industry to take a hard look at itself and embrace change in order to build resilience, protect against black swans and secure its rightful place amongst the top echelons of corporate management. Risk professionals must remove their blinkers to finally ensure their voice is fully heard within organisations and they deliver full value to their employers, she added during her keynote address. "As GRC professionals we assume that we are prepared for all of the risks that come at our organisation, but in fact I think what we are prepared for are the known threats and the risks that we can identify. It is around these that we build our most robust processes and those robust processes are essential to our organisations, but I don't think they are sufficient," said Ms Layton at the joint Risk Management Institution of Australasia (RMIA) and Australasian Compliance Institute (ACI) event held at the Gold Coast Convention Centre.hide"I think the risk systems that we build are fragile because we don't spend enough time asking how we should deal with the unexpected, the disruptions that inevitably occur as our businesses go about their operations. I think it is the fragile end of that equation that is the missing piece for us, and the tiger that we have got to grab by the tail," she added. She argued that too often risk managers get bogged down in the detail and focus too much on the process rather than asking whether actions deliver solutions. As a result robust yet fragile systems are put in place. Ms Layton gave two definitions of such systems. A complex system that is resilient in the face of anticipated dangers but highly susceptible to unanticipated threats and a system that can deal capably with normal disruptions but fails spectacularly in the face of rare and unanticipated ones. "Is this ringing any bells? It certainly does with me," she said. Fragile risk systems are one reason why there remains a lot of cynicism towards the profession, particularly after the global financial crisis, argued the keynote speaker. A lot of money has been spent in our space but are we and our organisations getting the best outcomes for that investment, she questioned. In order to reverse that cynicism and help address the long-term complaint from risk professionals that they are both undervalued and under heard, a change in outlook and a move towards building resilience is needed, she continued. "If you want a seat at the table you have to actually earn it and this is about something above business as usual. I have been hearing the same comments about our profession for fifteen years. So that begs the question what are we doing wrong so that we cannot get our voice heard in our organisations at the level that we want? And this is despite a raft of regulation that is aimed at increasing the volume of our voice...We have been blinkered and we need to take them off to see what we have been doing wrong and question the status quo. We do have a strong role to play," she said. A focus on building resilience to meet both the known and the unknown risk would open a lot of doors, she added. "Organisations that survive long term are the ones that can address and respond to those changes most appropriately and most rapidly through resilience. Managing risk is about managing that change. We absolutely have a role in building organisational resilience but it is something we have played at the edges of. It is not something, I think, that as a profession we have embraced yet at the level that we need to," said Ms Layton. This approach will require a new way of thinking and for risk professionals to develop their skills in areas such as change management, innovation and leadership. Borrowing on the work of professionals in the field, Ms Layton defined organisational resilience as the potential to exhibit resourcefulness by using available internal and external resources in response to different contextual and developmental change. "Its about saying our processes are a good thing, and I don't want to move away from those because I think they are essential to what we are doing, but it is also saying we need to think a little bit further than that as well," said the GRC expert. To help build resilience and achieve full value for their organisations, risk professionals must become change managers, continued Ms Layton. When a change occurs most people go through several key stages. These are shock followed by a defensive stance before moving on to acknowledgement, adaption, letting go and then acceptance. "We stop at defend. Once people become defensive we start to throw our hands in the air and say it is too hard, we can't do it. That is not what leadership is about and not how to achieve things. We all know that intuitively and we all know that practically and pragmatically from things we have tried to do over this past ten to fifteen years," said Ms Layton. To achieve change risk professionals need to exert power and influence. They must understand the political landscape, the different points of view within their organisations and where the power bases exist. They must also display leadership. "Being out in front and running ahead of the pack is not always the way. Leadership can come in a number of different guises. You can have supporting leadership, direct and participative. You need to explore what leadership you can use when a particular disruption is occurring," said Ms Layton. To build resilience risk professionals must also be innovators. This is implementing standard processes as far as you can get and will remove the fragile edge of the risk equation, said the GRC expert. "Don't just think outside the box-build a better box. The more expert you are the less likely you are to challenge the way you do things. I think we have a little bit of that in our industry. I think we have a bit of complacency and too much groupthink. We need to open our boundaries and think about our expertise and what we do in some different ways," said the keynote speaker. She also said risk professionals should hire people with whom they do not necessarily see eye to eye in order to remove groupthink, encourage people to get on their soapboxes, stand in other people's shoes and strive beyond what they actually want to achieve. "If we can be more innovative and add real value to our organisations we are more likely to get the seat at the top table that we want,' said Ms Layton. She also asked what if risk professionals became adaptive geniuses? An organisation that has adaptation capability built into its DNA is in a unique position to respond to any change or disruption that it faces, she said. And finally she suggested risk professionals need to become 'connectors' within their organisation to facilitate change. "This doesn't automatically happen, you need a person to connect the dots. What if it was a GRC professional that did this and we developed the social network in our organisation which we can then tap into when we have major disruptions and risk that we need to face and resolve," she said.

Risk managers must remove blinkers to overcome fragile systems

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