Risk Management is about identifying risks and avoiding disruptions. Risk Management is about Efficiency. Risk Management is about Money. However, in the corporate jungle Money is someone else’s protected territory. The sign at the gate warns: Finance.
The risk manager, talks about risks and plans to prevent, mitigate and/or transfer those risks. Finance, more often than not, finds these concepts vague. Two corporate worlds, separated by a common mission; that is, protecting the company’s balance sheet.
Risk managers increasingly need to be able to understand and communicate in very different organizational cultures. As the reach of risk management needs to be organization-wide, “translation” skills are becoming mandatory. The risk manager must be able to get in the mind of his or her target audience up and down the corporate ladder, by addressing the other person’s concerns.
For many C-Suite executives, insurance terminology is a foreign language. Or at times they tend to undervalue the financial impact of a loss high on the Risk Manager’s, list of priorities. Risk professionals need to demonstrate the deep interconnection between finance, supply chain, strategy and risk management. By engaging in a respectful, constructive, creative and inclusive discussion they can bolster Risk Management’s credibility, while proving themselves as worthy partners.
The C-Suite is focusing on improving capital efficiency, increasing profitability and generating stable revenue growth. Insurance is sometimes viewed as a pure expense, rather than a business enabler. Yet the real key to sustainable growth is careful control of expenses. Losses and unresolved claims are a drag on both growth and profitability. Risk Management increases the spread between revenue growth and expense growth.
How can a Risk Manager better support your organization’s business plan and facilitate its growth strategies?
Risk is everywhere in business. From acquiring talent and assets, to opening new facilities, to expanding product and service lines, there are a multitude of exposures to loss and liability. Skills such as the ability to understand how the business tactics translate into risks and communicate effectively how these risks can be treated and removed from the organization’s balance sheet – before a surprise event occurs – are essential and powerful. The Risk Manager must maintain steady communication up and down within the organization and must educate and serenade the C-Suite about the organization’s total cost of risk, the difference between risk retention and risk transfer and the importance of risk control.
Risk Management deserves a seat at the table to ensure that business decisions are informed about relevant risks. However, the fact is that Risk Management and Insurance simply isn’t top of mind for many executives.
Scaling up excellence in Risk Management requires speaking many languages. But most of all requires the will to focus, not on your own beliefs and needs, but on those affected by your actions.
At EXL, building on our decades-long experience working with leading organizations – both international and domestic – we offer tailor made Risk Management services, helping the C-Suite to transform risks into opportunities.