The marketing of risk management

Previously, I wrote about the idea of risk transformation. Such an initiative requires investments, however, budget owners are not very likely to rejigger their plans based on a simple request from risk managers for more funds. Therefore, risk management needs to learn from marketing experts to advertise itself:  formulate a value case, run risk management as a business, improve interaction between the business and Risk, and polish its own reputation. 

Risk management is more than a cost center

First, risk management needs to demonstrate that it is more than just a ‘cost center’. In my view, Risk’s added value is obvious: good risk management maintains an organisation’s licence to operate by preventing risk events from materialising, by helping the organisation to anticipate crises and other external threats, and by continuously improving organisational resilience. Yet this is not always crystal clear to others. 

How can risk departments keep playing this role, and at the same time increase the organisation’s understanding of their relevance? In my opinion, Risk needs to be run more like a business: who are the internal clients of risk management, what are their challenges, which products and services are delivered by Risk, and what are the costs and added value of these? I believe that all of these need to be more explicit. 

By highlighting the value added by risk, you can drive competitive advantage, improve the dynamics and the synergy between risk and the business, serve your customers better, take risks in a responsible manner, and make the job of the average risk manager more compelling. As a result, higher budgets may be allocated to manage risk. 

Take risks in a responsible way

Next to helping avoid unacceptable risks, risk management needs to enable the commercial units within your organisation to take risks in a responsible manner, instead of avoiding them at all costs. Because taking risk is an integral part of entrepreneurship.

Of course, I would be the last one to argue that organisations should take risks in a reckless way and embark on risky endeavours without thoughtful consideration. Taking more risk in a responsible way with help of a strong risk management function is possible - and necessary - within many organisations. And this is not a play on words, but simply a different way of looking at the role of risk management. 

More interaction between Risk and commercial teams is both a means and an end in this regard. To add more value, risk managers need to listen better to their internal clients and ask for feedback actively. At the same time, they need to increase their ability to explain the value of the products and services of risk management. In this respect, a lot can be learned from marketing experts. 

Polish the reputation of risk managers

Risk management is about a lot more than drafting policies, executing controls, and compiling reports. It calls for an understanding of business, advisory skills and lateral thinking, allowing risk managers to look beyond organisational departments and connect the dots between risks.

In addition, heightened attention on new and emerging risks such as climate, conduct and cyber risks leads to an increased demand for talents familiar with a wide range of subject matters, including, but not limited to, life sciences, psychology, data analytics and cyber threats. These talents need to feel welcome in - and attracted by - the risk organisation of the future.

To attract talent, the reputation of risk managers needs polishing. Can the image of the ‘perpetual critic’, ‘frequent naysayer’ and ‘occasional prophet of doom’ be reframed to the expert who sees the other side of the coin, the specialist who helps to find a healthy balance between risk management and entrepreneurship, and the critical friend who reminds others of potential risks of strategic decisions? 

Such a shift would benefit both the business and the risk function. It would also attract new and diverse talent: the risk managers of the future. More to come on this in one of my upcoming blogs. 

Risk management deserves a good marketing campaign

All in all, Risk deserves a good marketing campaign. Also, a different view on Risk is needed, which should be run more like a business. I hope that my piece will spark such developments. In case you still question whether this could work, just imagine how much Steve Jobs may have doubted his idea before he came out with his famous one-liner ‘Think different’ to the public. Well, I ain’t Steve Jobs, but I do believe that it is time for ‘Risk different’.

Also read the earlier parts of this blog series:

• Reimagine risk
• The seven ingredients of risk transformation
• Cost out, value in