What does it take to develop a good risk management strategy?

What does it take to develop a good risk management strategy? | Insurance Business New Zealand

What does it take to develop a good risk management strategy?

Ensuring that risks are well managed is vital to the smooth running of every organisation, but it is also an area that a lot of business owners might prefer to avoid - something which can result in a significant increase in risk exposures, and a higher chance of taking a financial hit.

One of the organisations looking to increase the understanding of risk management is RiskNZ, a non-profit group which aims to help businesses develop risk management skills, and to stay on top of current issues.

At the helm of RiskNZ is managing director David Turner, who has over 20 years’ experience as an adviser in the risk sector. When it comes to developing a good risk strategy, Turner said that his ultimate goal is to enable everyone within a business to be able to confidently talk about and assess risk.

Turner noted that he has worked with a huge number of organisations throughout his career including Deloitte, KPMG, PwC and the Ministry of Justice, and a common thread across every company is the need to have risk management embedded into leadership, and also to think creatively around how risk is managed.

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“Throughout my whole career, I’ve probably worked with about 100 organisations - that’s from when I was a paper boy right through to being ex-military, and then an adviser working with companies,” Turner said.

“What I’ve learned through all of that, and all of the great people I’ve worked with, is that management really comes down to having a good understanding of risk, and a good understanding of leadership - because that really sets a tone for risk management.”

“It is also about challenging what we do, what we’re planning, and challenging ourselves to make sure that we’re really getting it right,” Turner explained.

“Risk management isn’t hard at all, and we do tend to over complicate it. But if you want to do it really well, you just have to ask: ‘what are we doing, where are we going, and how are we going to get there together?’”

Turner said that a key part of risk management is being able to use tools in the right way, and also increasing the number of people who brainstorm risk strategies.

RiskNZ currently hosts regular seminars and training sessions for its members, and most recently organised seminars on the shifting cyber risk landscape, how to manage and de-risk disputes, and understanding how to use and implement Environmental, Social and Governance (ESG) principles. It also hosts an annual conference and workshops, which have included training on how to manage psychosocial risks, ethical issues, and how a firm can measure its ‘risk culture’.

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Turner said that doing risk management in the right way can lead to “great success” - however, getting it wrong can turn out to be very costly.

“You really need to make sure that you’re looking at the planning that you’re doing, looking at it realistically, and using risk management tools to their full potential,” Turner said.

“When you use risk right, you can have a great amount of success - it’s just about how much you want to do that. This means that the more time you spend on it, and the more time you get other people in the room to brainstorm how you approach challenges, the further you can get.”

“It’s also about empowering everyone to become a risk manager on some level, and to have that risk thinking,” Turner added.

“It is important for members of an organisation to be able to articulate risk management, and really be able to talk about it. It’s also important to not get caught in silos or in one way of thinking, and to be able to think about risk on a much broader level.

“For example, we’re going a lot into risk and opportunity, and so we’re thinking about creative ways of thinking about risk and creative ways of coming up with solutions,” he said.

“That all ultimately comes down to people, communication and having a conversation about it - that’s really the biggest thing that we can do.”