Is Lack of Collaboration Hurting Your Risk Management Strategy?
Corporate executives and boards increasingly expect risk professionals to identify and assess emerging risks — whether they are just around the corner or far off. But meeting that expectation remains a challenge for most companies, in no small measure due to a lack of collaboration within the organization.
During a recent Marsh webcast that I hosted, we asked the audience to respond to the following statement: “A lack of collaboration across the company is a barrier to my organization’s ability to understand the impact of emerging risks on business strategy decisions.”
- 63% of the nearly 200 respondents said it was true.
- 24% said false.
- 13% were not sure.
After more than a decade of seeing similar feelings expressed in the annual Excellence in Risk Management survey, our audience poll was not really a surprise. But it does raise the question of why this is such an intractable issue.
In the 2016 survey, released in early April, risk executives cited lack of collaboration as the main barrier to understanding the impact of emerging risks. And yet when it comes to emerging risks, “collaborative effort is key to success,” as panel member Richard Smith-Bingham said. A director in Marsh & McLennan Companies’ Global Risk Center, Smith-Bingham added, “Enlightened company leadership is also vital — the tone from the top that recognizes the importance of long-term value sets the tone for a culture of alertness and dynamic learning.”
With that in mind, we recommend starting with four key tactics to foster collaboration within your organization and tackle the important issues surrounding emerging risks:
- Challenge the makeup of your organization’s risk committee to ensure it includes voices from across the company.
- Make sure that conversations regarding broad global trends — and how they manifest as emerging risks inside your organization — is firmly on the agenda of risk committee meetings.
- Use, encourage others to use, and share takeaways from an array of sources on emerging risks. Discussing global and industry trends across the organization can spark broader collaboration.
- Push ahead on the use of data and analytics to identify, assess, and manage emerging risks — and share the results.
The good news comes from discussions with our Excellence focus group participants, who were drawn from a number of forward-looking companies. Many cited conversations, formal and informal, across their organizations around the intersection of risk and business strategy. For example, the director of risk management at a global technology company said she is “starting to see some of the silos breaking down, and seeing more risks being incorporated into everyday conversations.”
Encouraging collaboration is but one strategy to help make your organization risk ready, whether it’s for far-off threats or those that are top of mind today.
For more information on emerging risks, see Excellence in Risk Management XIII.