Get smart about risk
Get smart about risk
Only by building risk-intelligent organisations will leaders be able to overcome six distinct global threats identified by the Institute of Risk Management South Africa (IRMSA). This is according to Christopher Palm, IRMSA’s chief risk advisor.
The first threat is the exponential growth of information. Organisations who fail to build a competitive advantage around harnessing their data will be left behind.
The second is the drive to adopt new technologies. Failure to effectively implement digital transformation and fourth industrial revolution technologies will leave organisations vulnerable to those who do.
Third is the ability to develop innovative business models. If leaders cannot create new, agile and flexible business models, delivering faster, excellent decision-making, they will lose ground to rivals.
Fourth is disruptive competition. Young upstart enterprises are shattering traditional business practices with completely different approaches to delivering value.
The fifth is a next-gen market that not only expects data- and technology-driven experiences but supports agile disruptors over rigid incumbents. In other words, one has to be the best in breaking down barriers to entry or access to one’s products and services.
Sixth is a geopolitical landscape marked by Covid-19, climate change, trade wars and other socio-economic upheavals.
Palm says these six risk factors mean the pace of business is constantly accelerating in an increasingly complex global environment, resulting in greater uncertainty than ever before and demanding more, faster and excellent decision-making.
These conditions compel leaders to make the right decisions more often, much faster and using the best information available to them. If they falter, disruptors will quickly force them out of their own market.
“IRMSA believes the frameworks and methodologies of risk management can help them immeasurably,” says Palm. This means that private and public sector leaders must start thinking about the future together, using hindsight and insight to create foresight.
“That is not enough, though: thinking and designing alternative futures or responses to potential risks and opportunities, in advance and based on futures thinking and scenario planning, will give your organisation a basis for fast and reliable decision-making in concert with a flexible and agile business model.”
Organisations who do this successfully typically integrate their strategy, risk management and resilience playbooks to optimise decision-making. They also acknowledge that delegating ownership and accountability throughout the organisation is critical. To bring agility to their business model, they discard tall management hierarchies in favour of empowering people with the right skills to make business-critical decisions at point-of-contact, resulting in a risk-intelligent and resilient organisation.
Most of all, they break down “silo mentality”, that is, where information-sharing, decision-making and action are confined to a specific department or area of responsibility. “Risk management is collaborative by nature and that’s why we believe it plays a strong role in the risk-intelligent future,” says Palm.
Lastly, to achieve their ends, resilient organisations strive to become data-centric and tech-savvy.