The wide-ranging spectrum of the Operational Risk discipline, covering deliberate or accidental actions of employees, malfunctions of systems, and broken processes, has always prompted questions about the skills of the risk practitioner and the expectation that they need to be masters of all trades.
Employers are increasingly looking for risk professionals with outstanding interpersonal skills in addition to technical knowledge, extensive experience in risk frameworks, and regulatory and industry acumen. Risk teams must be able to successfully relay their knowledge, communicate, and engage with their stakeholders.
This idea was apparent pre-pandemic. A report by Deloitte Access Economics suggests that developing and enhancing soft skills is critical. By 2030, soft-skill-intensive occupations will account for two-thirds of all jobs. Gone are the days of behind-the-desk introverted risk clerks checking spreadsheets. One cannot instill a robust risk culture throughout the organization when only the risk department itself can manage risk. Consequently, a relatively small number of risk professionals must actively reach out to provide the necessary tools and empower employees to multiply the power of risk management.
In her inspiration book on leadership, Multipliers: How the Best Leaders Make Everyone Smarter, Liz Wiseman talks about leaders that bring out ‘the intelligence in others’ and create ‘collective, viral intelligence.’ The same concept applied to leadership can be extrapolated to describe multipliers in corporate risk teams.
What differentiates Operational Risk Multipliers? Recognizing that they cannot do it alone, they thrive in collaborating with the first line business units and support functions, actively positioning them for success. They are informal, approachable, and likable. They spend a significant proportion of their time engaging with their audience, making full use of formal and informal channels. They educate, facilitate risk workshops, provide advice, listen to concerns, and spread knowledge.
The Pandemic and the working from home (WFH) environment have challenged risk management’s outlook even further. Due to WFH, which is now likely to remain long-term in some way or form, risk teams had to learn how to become virtual multipliers quickly.
Undeniably, engaging and multiplying virtually is more challenging. A significant informal communication line is strained; no chats at the watercooler or quick coffee breaks. So how do you become a virtual multiplier, and is it even possible?
Successful Risk Teams applied situational awareness and attempted to adapt to the ‘new normal.’ Recognizing the power of maintaining close contact, they started to proactively reach out to stakeholders with a ‘virtual coffee’ value proposition. The risk team further developed high-quality, relevant training for end-users and used technology solutions to their advantage. They utilized all possible interactive features such as live polling from Mentimeter, the meeting revolution solution from Klaxoon, and many others available in the market. Risk Teams even took the initiative to lead virtual focus groups, identify threats to corporate cohesiveness, and considered how a risk culture could be transformed beyond crisis.
This process is still new; as we enter 2021, more thought is needed to develop and foster successful virtual risk multipliers.
Why are virtual risk multipliers so important to the organization? Their crucial work leads to a better understanding of the changing risk and control environment. Much has been said about increasing risks, such as information security, fraud, and market abuse, during the Pandemic. Undeniably, basic controls have also deteriorated; firms went with continuity over controls; a necessary step to enable a quick shift to WFH. As a result, face-to-face supervision and physical oversight had to be relaxed. Ongoing engagement with employees to discuss risk and control environment enables Risk Teams to keep their hand on the pulse of possible risks, provide transparency to the boards and senior management, and allow the firm to be one step ahead of the crisis.
This, in turn, increases the Operational resilience of the organization as an outcome of Operational risk management. The Pandemic is symmetric, affecting companies across the globe in a similar way. It is also prolonged and slow-moving, allowing organizations to adapt, learn, and enhance practices. As we move into 2021, different types of disruptions that are firm-specific and sudden will inevitably occur. Organizations that built sound risk management capabilities will emerge stronger than their peers.
These robust risk management capabilities cannot be developed without successful risk teams, virtual multipliers, who are at the heart of the firm, carrying out a crucial task of multiplying the power of risk management.