A Common Language
Issue #23
September 10, 2007
It was Tuesday and I had just completed a planning session with a manufacturer who was about to embark on our risk assessment process. The meeting included their management team, one of whom was the Director of Human Resources.
On my way out, the HR Director pulled me aside and said how excited he was about this project. He went on to say that he was looking forward to having everyone speak a common language when it comes to managing their risks. I thought that was an interesting observation.
The Silo Effect
Managers have a tendency to manage only their own silo, meaning something over which they have control. We often see discrete roles established for a small set of risks, typically finance, insurance, and compliance. The key is to break down those arbitrary boundaries and view risks as they truly impact all areas of the organization
I thought about a couple of the benefits of enterprise risk management. One is to reduce the burden on business operations by standardizing risk management principles. The other is to reduce the cost of this process by improved sharing of risk information and the integration of existing risk management functions. Perhaps this is what the HR Director was looking for.
It Finally Hit Me
The following day, Wednesday, I was scheduled to facilitate a risk assessment workshop with a different management team who's company was well along into the process. This workshop takes place after we have undertaken the risk identification process, and is where we present our observations about their risks, conduct a two stage prioritization session, and develop a plan of action focused on their most critical issues.
In the course of developing their plan, we talked about things like risk factors, probabilities, potential severity, and alternative solutions. We mapped out their risks and decided as a group who was going to be responsible for each, the appropriate course of action to take, and the time frames for completion. In three hours, I was pleased to see they now had a plan for moving forward. Then it occurred to me, they were now all talking a common language. I think the HR Director from Tuesday's session is going to be satisfied.