Some Risk Advisors simply don’t have the depth of experience they need to guide organisations toward risk management effectiveness and maturity. Can you really trust your risk advisor to provide you with the right advice, structures, systems, and subject matter expertise that you need to shape the Risk Management capability of your organisation? How frustrating is it when your Risk Advisor knows less than your Risk Manager!
There are many Risk Advisors offering a range of advice and solutions across every aspect of Risk Management. But just how much do they really know and understand about Risk Management when it comes to embedding it into an organisation and working with the organisation to make it effective? Do they even know what effective looks like through the eyes of the organisation?
All too often we see articles offering opinion on various aspects of Risk Management – some good, some unsubstantiated and unproven. The source of such poor advice isn’t limited to smaller consulting firms, and we all too often see the confusion between audit and risk management that prevails in the larger firms.
It’s a literal ocean of opinion about the right Risk Management Framework, how to develop and apply Risk Appetite, the use (or not) of Risk Registers, Risk Management Software applications, and on it goes.
Many Risk Advisors offer opinions based only on theory and have no hands-on practical experience to support their suggested approaches. It’s one thing to have an opinion on what should happen, but another entirely to engage with an organisation’s Executive and Board and expect them to simply sign on to your idea because you think it’s a good one. A big part of Risk Management for many organisations is the need to change to increase Risk Management effectiveness. Very few Risk Advisors have worked through those change management challenges to drive organisational Risk Management efficiencies.
Many Risk Managers have a greater depth of experience and Risk Management knowledge than the consultants they engage. So why then are they engaged? It is common for a consultant to be engaged to satisfy the Board’s need for independent confirmation of Risk Management effectiveness. This in itself isn’t a bad thing, but it can also be driven by the inability of the Board to define the improvements or changes they think are needed to meet or maintain their ASX Risk Management requirements. That too isn’t necessarily a bad thing – seeking external expertise when needed is prudent. The problem is the selection of “experts” who are far from adequately skilled and experienced to pass judgement.
In one of my past corporate roles I experienced an independent Risk Management review that left me completely uninspired. Waiting for the right questions to be asked, they simply never came. The focus was entirely on form, rather than substance. A missed opportunity to add value, the resulting conclusions and recommendations were valueless. What a wasted opportunity to provide real value. If only the review had been undertaken by qualified experts.
So how would you know whether the Risk Advisor is worthy of your engagement? Ask yourself the following simple questions to give you confidence that they are suitably experienced and competent:
Have they been in a Risk Management role?
Have they managed a Risk Department?
Have they ever had to develop, deliver, and manage a Risk Management framework and function?
Have they ever had to apply what they preach?
Is their Risk Management experience broad (enterprise-wide), or narrow in focus?
Do they have broad business acumen? Will they understand the business’ issues and challenges?
What experience do they have in managing and influencing organisational change?
Do they have the necessary knowledge, skills, experience and behaviours?
What formal qualifications do they have to complement their experience?
The concepts of Risk Management are relatively simple. Developing and embedding Risk Management into an organisation and driving effectiveness to create and protect value is easy in theory, but when it comes to making it happen, theory adds very little. Experience counts for everything.
Select your Risk Advisor wisely and you will get the value you need.
From risk comes opportunity….