In a previous post I had this headline: Firms struggle with how to conduct risk assessment and quoted from a series of surveys going back to 2008. News has been continuing in the same vein, so for example last year’s Economist Intelligence Unit paper (Nov 2010) entitled “Fall guys: Risk management in the front line” reported that only 35% of respondents believe their firms are effective in detecting emerging risks.
Risk Managers: Strategic Skills
Since I created the online course How to Conduct High Quality Risk Assessment for the Risk and Insurance Management Society(RIMS) professional development program, it has turned out to be the most popular course of the four offered. They can help practitioners gain confidence that their risk identification and assessment processes are incisive and insightful. They also help risk management professionals work towards their RIMS Risk Fellow designation without the expense of attending on site workshops.
On the question of emerging risks raised above, risk managers face a real dilemma when they are not able to construct a model to show a range of outcomes, nor able to do realistic stress testing, because the project time lines are too far out in the future. We are talking about questions of high uncertainty where relationships of variables will have changed. This comes up in long term strategy, or major project planning. Some method must be applied and integrated with your risk management plan, yet conventional forecasting will not answer. Knowing how to do Future Scenarios sessions (see Special Case Studies in Risk Management – Module 1) is an essential skill. It does not pretend to be a crystal ball. Rather, it is a reasonable way to deal with the unknown and check the resilience of the strategy.
While “opportunity” is often heard in the risk management rhetoric, the standards are not oriented toward searching for opportunity systematically. Usually it is presented in terms of happenstance: a risk that somehow presents a novel chance for gain. But risk managers should be able to conduct a process with colleagues to seek out and develop opportunity in, for example, new product/service combinations, process efficiencies, or new business models. Creating Value: Risk Manager as Innovator delves into personal creativity, incubation of ideas, and the principles of successful program launch.
Our newest course gives risk managers the chance to enter the world of IT systems, make sense out of it, and bring it within their purview. Managing IT Risks and Cyber Threats is presented by my former colleague, Michael Fong, who is a systems expert. We made sure that the course takes the point of view of the risk manager who does not need to become the content expert, but wants to to know how to effectively engage with systems people in the organization and manage IT risk.