31 January 2016

Risk Culture: The Root Cause of Business Assurance...

There is a scarcity of enlightened organizations who truly understand the root cause of risk in their enterprise. The business assurance they seek and the Operational Risk Management (ORM) outcomes they receive, are in direct proportion to the "Risk Culture Maturity" within the company.  This risk culture maturity, is at the root cause of why certain kinds of risks exist and what ability the organization has to accept, mitigate or transfer that risk.

A risk culture begins and ends with a human ability to communicate effectively with other humans. The human behaviors associated with communicating risk has all to do with the ability of one person to know the truth and to effectively tell the other accurately and effectively what the risk is and how it could impact the business. The trouble is, most organizations fail to spend enough time doing exactly that and doing it with out fear.
"What kind of fear? The fear that by telling your supervisor you might offend them. The fear that by questioning the co-worker about their decision, that you will alienate them. The fear that by uncovering a fellow workers risky behaviors to the rest of the team, that you will jeopardize the overall mission."
The ability or lack of ability by a human to communicate risk factors to each other with the truth and without the fear of judgement or retribution is why you either live or die. This is the reason why your organization continues to flourish or rots from the inside out. You see, the risk management environment in your team, unit, office location or FOB has all to do with communicating the truth in an effective way.

The risk culture problem, is one that continues to rear its ugly head time and time again and exemplifies itself in the published press, or the digital eDiscovery process of modern day litigation. Look back on most any loss event like this and you will see that it could have been addressed or contained, if only humans would have communicated effectively about risk(s) to them personally or to the unit. Whether it be a family, a branch office, partner or entire agency of government.
Companies need to put in place oversight of strategic partners, vendors and service providers to ensure that those support organizations are meeting their own risk standards. A company should share its risk management guiding principles with third-party suppliers or partners to influence their decision-making process. Risks and controls should be a consideration when choosing new partners, and they should be re-evaluated on a regular basis to help avoid the potential of vicarious liability by the poor decisions of an alliance partner.
The organizations that survive and are able to out perform their competition are those that understand this reality. Leadership who magnifies the requirement for people to strip away the fear of judgement, retribution, or long term bias and to communicate the reality of what they truly sense as humans will be superior. The risk culture that is understood, truly, and simultaneously monitors peoples ability to learn from their mistakes will continue to outperform and survive in whatever environment it lives in.

Leadership is charged with the state of their organizational culture. The fundamental risk to any organization, is that leadership does not recognize this and pays little or no attention to maturity of their culture to deal with risk and human factors ecosystem. This begins with the person across the table, by your side in bed or next to you in control of a vehicle, on land in the air or in the ocean.

It doesn't matter who the leader is. The Founder, CEO or Chief Risk Officer. The Branch Manager, Area Supervisor or Vice-President. The Element Leader, Master Chief or C.O.. Mother or Father. Managing the culture of communicating the truth, reality and without judgement begins the process of a risk management entity that will not only survive; it will outperform the perceived opposition.

Enlightened individuals who are multi-dimensional and are comprised of a brain trust of diverse people who have different life experiences. These courageous people must then be engaged in the correct setting and risk culture, with the right combination of business objectives, resources and highly detailed mission outcomes. Only then will the environment they operate in determine who survives the continuous performance evolution.

The root cause of Business Assurance and Resilience is the Risk Culture.

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