12 Mar Top 4 Tips for the Development & Maintenance of a Risk Management Culture

Regardless of your industry, avoiding potential risks and managing those you do face head-on is of crucial importance to the survival of your business. When building, maintaining and growing a business, you are more than likely to come across a great array of pitfalls, and you must do your best to circumvent or manage these if you want to experience success. This, of course, is a whole lot easier said than done.

With this in mind, what are some of the main strategies a business can adopt to avoid risk and build a sound, effective and comprehensive risk management culture within the firm?

Find out here EIMF’s top tips for the development and maintenance of a firm’s risk management culture!

1 Establish Standard Risk Management Procedures & Policies

One of the first things a company should do to establish a risk management culture is to develop procedures and overarching policies to deal with risk. If there are no standards set in place, employees will not know how to avoid risky situations or handle them when stuck in the middle. Keeping in mind there isn’t a “one size fits all” risk management solution, these policies and procedures must reflect the company’s overall nature and culture and obviously be built to confront those risks that are most prevalent in the industry.

Procedures must be step-by-step in nature and offer employees and upper management with an easy, clear and effective roadmap to follow when dealing with risk. As noted in PwC’s 2018 Financial Services Risk Culture Survey, it is imperative for companies to “review your [companies] risk culture framework and make sure it covers a broad but realistic set of dimensions, including elements of leadership, governance, talent, communication, and global operating norms.” Besides assisting in the avoidance and management of risk, setting these procedures and policies from the onset will allow firms to minimize future costs, optimize workflow, and ultimately perform in a more efficient manner.

2 Learn From & Rely On Past Experiences with Risk

It might sound cliché but learning from your past experiences and avoiding similar mistakes is a powerful tool when it comes to the development and maintenance of a risk management culture within your firm. Hence, it is important to design and keep an in-depth risk register that includes all instances of potential and experienced risks, solutions applied or decisions taken, and final outcomes.

For example, Chris Caron, Compliance Director at Kiewit, an American construction and engineering company, pushed the company’s project managers to complete “a risk matrix for their own projects” and fine-tune “the company-wide risk measurement scale to better reflect the organization’s risks.” Furthermore, as suggested by File Minders, a Cypriot company in enterprise information management services, integrated risk management can be facilitated via “scanning, data capture, management, preservation and delivery of information through structured physical and digital systems encompassing document management, imaging, records management, workflow and regulatory compliance management.”

As you collect knowledge and data, patterns and trends might emerge that will allow you to predict the future when it comes to avoiding and managing risk.

3 Set the Risk Management Tempo from Above (or Tone at the Top)

It is practically impossible to expect employees to adopt a set of risk management procedures and policies if the firm’s upper management is not doing the same. Hence, establishing a strong risk management culture starts with the company’s leaders. As explained by Covercent, a developer of ethics and compliance cloud platforms, “making sure that top-level management is using the same messaging and approach that you’ll be promoting will help solidify the message and give weight to its importance.” A great specific example is the case of Sales Force, the US-based cloud-computing giant.

Sarah Clayton and John Wisdom, who work for PR firm Weber Shandwick, report in Quartz at Work that “the alignment process [at Sales Force] starts at the top with co-CEOs Marc Benioff and Keith Block defining their “V2MOMs,” as they’re referred to internally.”

More specifically, write Clayton and Wisdom, “this framework allows them to record their vision, values, methods, obstacles and measures for the year to come,” with “all employees then [following] suit, completing their own V2MOMs and ensuring not only that what they do is consistent with the company’s strategy, but that how they do it aligns with the company’s values.”

4 Train Your Staff to Identify & Manage Risk

However, it simply isn’t enough for leaders to set an example by adopting said set of risk management procedures and policies. Employees must be properly trained in recognizing, avoiding and managing risk and being consummate team members of an organizational culture that excels at risk management. Obviously, this training will also help employees take the best available decision when faced with potential risks.

Additionally, once employees are properly trained and risk management procedure and policies have been deeply ingrained, the organization should make sure to continue to refine them based on changes to its overall business strategy.

Are there any additional tips you’d like to suggest on how to build the ideal risk management culture? Make sure to share them with us!

EIMF offers a variety of learning and development opportunities for individuals interested in risk management for their firms. For additional details on these offerings, please click here.

EIMF’s expert advisers are also at your disposal and can be reached at +357-22274470 or [email protected].