Many business leaders and managers, ranging from the board and CEO down to first level management, fail to appreciate how risk management contributes to business value. Too often they see risk management as mere compliance management or as the need to listen to naysayers who bring up issues that potentially block business opportunities. But risk management provides much more than these negative stereotypes suggest: more fundamentally, risk management is a critical element in maximisation value for the organisation’s stakeholders. As June Scobee Rodgers, widow of the space shuttle Challenger commander Dick Scobee, once said: “Without risk, there is no discovery, there’s no new knowledge, there’s no bold adventure… the greatest risk is to take no risk.”

In the same way, there would be no progress in any organisational endeavour without a willingness to undertake risk. All entrepreneurs and leaders understand that at some level. The challenge for the risk management community is not only to share those sentiments, but to show how effective risk management can directly contribute to the end objectives of every organisation.

The problem is that many people outside of the risk management profession think of risk – if it is seriously considered at all – as merely a complement to the management decision making process. Decision makers typically understand the need to balance costs and benefits, but too often fail to considered risk as a tradeoff factor to be balanced with cost and performance. Instead they may see risk as simply a last filter through which decisions must pass. In such an environment, risk serves only as a gate through which decisions that have otherwise been deemed to provide adequate return on investment (ROI) must pass. Risk professionals in such an environment can be viewed as simply those looking for a chance to say ‘No’, rather than contribute to business solutions.

Jan-Mar 2014 Issue

Cambio Consulting Group LLC