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RISK MANAGEMENT FOR LEADERS
KATE SAYER
20 APRIL 2017
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AGENDA
Focus on managing risk How risk management is relevant to leaders Talk about culture Think about risk-taking And more…
RISK MANAGEMENT PROCESSES
Talk to your neighbour 3 minutes each way How is risk managed in your organisation?
HOW DO YOU DO IT?
TRADITIONAL APPROACHES
Identify all the risks you can think of Rank them for impact and likelihood Multiply the factors to prioritise risks Present in a risk register Variations on this?
RISK REGISTERS
TYPICAL RISK MANAGEMENT
RISK AVERSEARE BOARDS REALLY THE PROBLEM?
CULTURE CREATED BY RISK REGISTERS?
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LEADING RISK MANAGEMENT
Trustees
Audit committee
Middle managersSenior managers
Strategic risks• External• Outside your control• Possibly high impact
Operational risks• Internal• Within your control• Possibly high probability
MitigationResponse plans
Reduce likelihoodFramework of
controls
Management assurance on control
Active, regular
monitoring
STRATEGIC RISKS
Often external Need to monitor regularly Focus on high impact risks and scrap the
ranking Talk about how you would respond if that risk
event materialised – rehearse Clear responsibility for developing response
plans and implementing
STRATEGIC RISKSTHE BIG FIVE
OPERATIONAL RISK ASSURANCE Managing day-to-day risks is part of the normal
management job Describe the actions and processes in place to
manage risk Map to the risks Identify gaps or overlaps Notes on further actions or changes Annual sign off Provide training and coaching
RISK POLICY
Policy should describe attitude to different areas of risk Where it is appropriate to take risks Level of risk that is acceptable in different
scenarios Communicate the risk policy Review strategic and operational risk in the
context of the policy
RISK-TAKING – NOT RISKY
RISK FOR INNOVATIVE ORGANISATIONS Starts with risk policy Project management tools Pilots Feedback mechanisms Pre-mortems Multi-disciplinary teams Finance team engagement
RISK CULTURE IN INNOVATIVE ORGANISATIONS Feedback not failure Fail quickly Reward the right behaviours People are well-intentioned Talk about the strategy Devolved structuresTheory Y organisations as described by Douglas McGregor in “The Human Side of Enterprise” 1960
SUMMARY
Do you discuss your big risks regularly with senior managers and the Board?
Do you have response plans for major strategic risks?
What is the culture being created by your approach to risk management? What do you want your culture to be?
Where do you want to be risk-taking? Where should you accept risk?
QUESTIONS FOR LEADERS
MORE INFORMATION
Rethinking risk: beyond the tickboxFree to download on our website
www.sayervincent.co.ukContact
“Discipline makes daring possible”
Dr Atul Gawande – 2014 Reith Lectures – “The Century of the System”
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