Risk Management Insights

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25/05/2018 / Bow Tie Analysis, Risk Appetite, Risk Manager, Risk Culture

Are you a risk manager?

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I am often asked “what are the key requirements that make a good risk manager?”  My first response is “to be able to walk on water”. Such is the required varied skill set of a good risk manager.

The roles and responsibilities of the risk manager are many and varied depending on the organization they belong to. I will use the example of an organisation that has an independent risk management function where risk, and the day to day management thereof, is owned by the business. Let’s look at the key characteristics of the CRO and the staff of the independent function.

The main function of the independent risk manager is to review and challenge what the front line business is doing to manage risk. In addition, they should be seen as subject matter experts and assisters in developing and maintaining the risk management frameworks. They should be seen as value-adding and adopted by, and engaged with, front line staff.

What are the key skills and characteristics needed to be a success in this role? Here is my list:

  1. Risk management is to a large degree an art form. This requires a strong right hand (artistic) brain, able to cope with qualitative and inexact concepts and able to “see” into the future.

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18/04/2018 / Risk Culture, Risk Management, Risk and Reward, Decision Making

Risk Management to Management? Is “Decision Support” the future?

Three key treasures of good risk management

The future of “Risk Management” would look brighter if we removed the word “Risk”. It is just “Management”. If “Risk” is “the effect of uncertainty on objectives”, Risk Management must be “managing the effect of uncertainty on objectives”. This is “Outcome Management”.  

Business Management involves making decisions aimed at achieving business objectives. Outcome management is therefore just management.

The future success of risk management relies on making it an integral part of management. This will only happen if risk management provides the right incentives. Humans and hence organisations run by humans, respond to incentives. Read related article: '10 keys to Risk Management Success'.

Psychologists have discovered that when a person is handed an unexpectedly hot cup of coffee, they typically drop the cup if they perceive it to be inexpensive but manage to hang on if they believe the cup is valuable.

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02/03/2018 / Enterprise Risk Management, ERM, Risk Culture

How to promote Risk Culture in your team

In a recent discussion with a colleague on preparing for 'black swan' events, we concluded that regardless of the size, type and structure of an organisation, it was having the right risk culture that was the key success factor in preparing for and surviving an improbable event.

Our view is that getting the right culture to support risk management across the business is the most important ingredient for success. But what actually is this thing called 'risk culture' and where can you get it? We believe that risk culture is the system of values and behaviours that are present in an organisation and guides all the decisions related to risk, made by management and employees. 

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13/12/2017 / Risk Culture, Risk Management, Protecht News & Events

2017 Wow... What a Year

Protecht's 2017 in Review! Thank You for Your Support

The last 12 months have been full of amazing changes and challenges for Protecht and we want to take this opportunity to thank all our clients, partners, staff members and blog readers for all the support. We have many reasons to celebrate; continued growth in our wonderful advisory, development and support teams, record growth in client numbers as well as the move of our Sydney head office to a bigger and better space. It was almost 20 years ago that David Tattam and I commenced working together on the Protecht concept, dreaming of one day having a leading risk management training, advisory and software company. There is still more to do as always, but it has been the most rewarding business risk that we have ever taken. 

Below are some of the milestones that made this year unforgettable for us and also some pictures of our clients and staff Christmas parties. Merry Christmas and Happy New Year 2018. 

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20/11/2017 / Compliance Management, Risk Management, Risk Culture

Compliance Risk Management Real Example

Gorillas and Bears – Comply or Die!

The story of Harambe, the Cincinnati Zoo’s much-loved Gorilla, went global in its interest. A defenceless animal was shot and killed to save a child who had fallen into its enclosure, not to mention the trauma suffered by the child. Investigations have since found that the barrier separating the public from the gorilla was not in compliance with primate-housing standards and requirements.

This simple story serves as a reminder as to the real reason for the compliance requirements and obligations we face, that is, protection of the various stakeholders of our businesses.

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06/10/2017 / Enterprise Risk Management, Risk Culture, GRC

Making Risk Sexy

This article was written by Vicki Wilder , Board Director, Governance Professional. Edith Cowan University. We are sharing it with the Protecht Risk Management Insights Blog readers. 

sexy
ˈsɛksi’
adjective

1. Sexually attractive or exciting. "Sexy French underwear". Synonyms: sexually attractive, seductive, desirable, alluring, inviting, sensual, sultry, slinky, provocative, tempting, tantalizing; more

2. Informal - very exciting or appealing.
"business magazines might not seem like the sexiest career choice"
synonyms: exciting, stimulating, interesting, appealing, intriguing. Source here.

Have I got your attention?

As our team barrelled down the road in an SUV on our way to a team builder last year, a sign blared “Sexy Salmon Fillets” near a fishmonger. The mind boggles. Sexy (definition No. 1) , I’m pretty sure they weren’t, but topic of conversation they remained for months, so hats off to the advertiser - they had our attention. Given the apparent multiple definitions perhaps they meant that the fillets were appealing?

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14/09/2017 / Enterprise Risk Management, Risk Culture, Protecht News & Events

Risk and Compliance Conference Season 2017

The Protecht team is looking forward to this year's conference season. Our focus will be on industry specific conferences where we will showcase how Protecht's full suite of risk management training, advisory and software services map to the needs of each industry sector.

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12/09/2017 / ERM, Compliance Management, Risk Culture

Reputation Damage - Risk Event or Risk Impact?

Looking back over the last 12 months, corporate scandals continue with the finance industry seemingly always managing to make the headlines. Wells Fargo fake accounts in the US, CBA anti money laundering issues in Australia are two examples. The flow on effects from these scandals are often similar:

  1. Executives and CEO's involved are ushered out the door - key person risks arise.
  2. Fines were or will be imposed by regulatory agencies, which seem larger and more punitive in recent years.
  3. Class action lawsuits are attempted on behalf of disgruntled shareholders resulting in additional legal fees and potential settlement costs.
  4. Strategic growth objectives are derailed, as the companies involved need to batten down the hatches to recover from the scandal.
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21/07/2017 / Enterprise Risk Management, Risk Controls, Risk Culture, Risk Management

Prevention is better than cure - and other risk management cliches

There are many well used, almost clichéd phrases in the English language that contain powerful messages for the risk manager. Some that come to mind include:

Every cloud has a silver lining:  If we suffer a risk incident, we can usually find value, especially if we manage the incident really well and learn from our past mistakes.

What doesn’t kill you makes you stronger: Failure is good, as long as we fail within our risk appetite, fail fast, fail with minimal damage and most importantly, learn from our failures. This will only make us stronger in the long term.

And my favourite…

Prevention is better than cure: It is better to practice proactive, preventive risk management rather than reactive firefighting risk management. 

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06/06/2017 / Enterprise Risk Management, Risk Controls, Operational Risk, Risk Culture

Reducing human error...

What is Human Error?

Risk events often have many contributing causes, a common one being ‘human error’. But what is human error can be adequately mitigated? Human error can be defined as being a ‘failure of a planned action to achieve a desired outcome’.

Actions can fail to achieve the desired outcome if the action itself is inadequate for the purpose for which it was designed; or the action can be adequate but the execution of the action can be deficient – either through unintentional or intentional behaviours of people. Related article Expected and Targeted Risks.

Outcomes? 
There are therefore six possible outcomes in the combination of plan and human action:

  1. An adequate plan that is intentionally followed will likely result in the avoidance of the risk event
  2. An adequate plan that is unintentionally not followed will likely result in failure – a risk event caused by human error
  3. An adequate plan that is intentionally not followed will likely result in failure – a risk event caused by malice
  4. An inadequate plan that is intentionally followed will likely result in failure – a risk event caused by poor planning
  5. & 6. An inadequate plan that is unintentionally or intentionally not followed has a higher likelihood of failure or success of meeting the ultimate objective.

An example…
Is the case of the Piper Alpha disaster, where personnel who followed the muster procedures found that they could not access the lifeboats from the accommodation block, personnel who survived the disaster were those who (unintentionally or intentionally) chose to violate the muster rule and ‘step off’ the platform into the ocean. Therefore, an inadequate rule (plan) was violated and the ultimate objective (no fatalities) was individually achieved as these people avoided the risk event.

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