Communication – a Priority for Risk Management?
Risk management – highly diverse and highly collaborative. A career in risk management is underpinned by communication.
Communication is infused throughout every function of risk management. This communication is a multidirectional process which calls for risk information to freely flow throughout the organisation. Whether communicating with the board, stakeholders, partners, employees or externally of the organisation, it is the role of risk management to maintain strong and effective communication.
With the financial crisis a textbook example, miscommunication and ineffective communication has the power to propel negative situations into irrecoverable territory. The United States Financial and Economic Crisis of the late 2000 are one example among countless of corporate collapses that trace back to both risk management oversight and a disconnect between risk management and the wider organisation.
An overarching element of a risk manager’s responsibilities lie in evaluating and communicating risks to C-suite executives and stakeholders. As a generalisation, these senior audiences hold a weaker technical foundation and require risk managers to convert complex risk ideas, practices and languages into digestible and actionable information. These relationships make sound interpersonal and communicative competencies imperative.
With the increasing openness and awareness surrounding risk programmes at board level, risk management increasingly has a seat at the table. Beyond verbal communication, risk managers must be able to succinctly communicate in written board reporting. This reporting should outline the businesses’ risk environment and provide actionable recommendations for the board.
Adopting a flexible approach to communication is also vital. Communication to gain board support on a topic may require a spin whereas educating specific individuals may require a completely unique approach. Risk managers with language skills are particularly desirable given the wide-reaching scope of a risk professionals role.
In board level communication, risk managers should maintain transparency throughout discussion with full disclosure of any concerns or limitations. The aim is to equip decision-makers with everything needed to make informed, accurate and practical decisions. Risk communication should be guided by the basic questions of; what information surrounding risk is most crucial to communicate? Who needs to know this crucial risk information? And, how will risk management most compelling communicate this information to the relevant audiences?
Looking beyond the board, risk managers need to adopt differing communication strategies with employees across all organisational levels particularly with middle and front-line employees who are rarely informed to enterprise risk information. Just one-third of middle managers and a fifth of front-line managers acknowledged in a CEB survey to being privy to communication or training on the enterprise risks which are top concern in their organisation.
Interpersonal skills feed into this communication. Risk managers with the scope to understand unique individual perspectives will see their risk programme enhanced. It is human nature to be driven by personal perceptions, values and assumptions. Understandably, stakeholders and board members are not exempt from this and can make judgements surrounding risks driven by their personal assumptions. It falls on risk managers to correctly guide these assumptions through clear communication
Risk management and an organisation’s risk culture need to become infused. With this infusion, open risk communication with all stakeholders should be driven through consultation and open dialogue that aims to avoid the trap of one-way information flow.