Hein de Kort's striking illustration ( “solid? ” “ super solid ” ) in Marcel Pheijffer's article elegantly answers the question the author poses ( Financieel Dagblad August 7, " Is risk management an unnecessary discipline, or does it have added value? " ).
Mr. Pheijffer accurately concludes that risk management has added value, provided that risk managers stand firm, and that leadership both listen and embrace the risk managers' messages. That statement is an indisputable truth; a conclusion with which one can hardly disagree.
However, it denies a dynamic that is a much more essential truth and points the way forward for risk management: risks are born and identified deep in organizations, and often much deeper than traditional risk managers have their eyes and ears. Therefore they miss these risks in their early phases or see them too late. As Doug Hubbard wrote, “Ineffective risk management methods, often touted as “best practices”, are passed from company to company like a bad virus with a long incubation period: there are no early indicators of ill effects until it is too late and catastrophe strikes” (The failure of risk management, 2009).
But early signs of such catastrophes do exist! If risk managers adopt a healthy risk leadership mindset and enable the entire organization to engage in managing risk, they can be identified early and mitigated.
We must start crowdsourcing risk. Risk management is too important to leave it to risk managers alone. They must provide tools and processes that enable the entire organization to see under every bridge, as the illustration beautifully expresses. I wholeheartedly encourage risk managers to empower organizations to declare uncertainties, both risks as well as opportunities. Nobody is as smart as all of us.
And the moment is now. We have seen increased levels of togetherness through COVID-19. Let this more profound sense of collaboration empower organizations to create a risk leadership culture in which everybody feels secure and is encouraged to declare and mitigate uncertainties. To again reference the illustration, I am sure somebody in the organization will stand up to share that the pillars are rotting and the bridge will collapse. The question for leaders is not only "Can you hear?" but "Do we have a culture that listens?". Suppose it is clear to everyone that such messages will be listened to and embraced. In that case, you can transform risk management from a necessary discipline to one that creates value and drives exceptional performance across an entire enterprise.
Marischa van Zantvoort
CEO Loyd Consulting Group
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