Building a Risk Intelligence system

By Horst Simon

Modern risk management is much more about the human factors than processes, procedures and following standards and frameworks, there is no one-size-fits all. You can follow standards and frameworks to the last letter and still be ineffective at the actual management of risk, purely based on the human factors of conduct and risk-response decisions made by people.

The end-result of most current risk management efforts is that we consider good risk management to be a “green” risk report that is based on historic data as at the end of the previous financial quarter; a corporate document that adds little value to actual decision-making a few months later. Modern risk management is moving away from discussions of outdated, colour-coded reports to the effective management of risk by all employees through prudent and informed decision-making.

Success with the effective management to risk lies in the quality of information at hand to evaluate risk and take risk-informed decisions at the right point in time. Organisations spend lots of time and effort building and developing robust risk mitigation frameworks and strategies to manage business-specific risks. Despite constant monitoring through dashboards and reports, many still face major and unexpected issues. Although organisations are well-prepared with relevant processes and other infrastructure in place, they often struggle when cultivating a sense of risk awareness, responsibility, and intelligence into; and across the fabric of an organisation, which results in gaps and deficiencies.

Here are some key elements of Building a Risk Intelligence system:

  • Developing dynamic situational awareness
  • Collecting risk intelligence from everywhere!
  • Internal and External information gathering processes, including social media
  • Building internal pathways throughout the organisation
  • Encouraging clear and unobstructed communication
  • Making sure that bad news travel faster than good news
  • Knowing what is real and what is fake
  • Make others succeed

Clear and unobstructed communication is especially important in a process to collect risk intelligence from everywhere and have internal pathways throughout the organisation where bad news must travel faster than good news. Risk intelligence demands that every individual in an organisation take responsibility for identifying, reporting, and managing risks in the day-to-day operations.

Failure to uncover risks result in organisations simply being unaware of the build-up in risk. Employees often do not flag or report new risks or an increase in risk exposure, often because they just decided that the risk is unlikely to materialise and cause a loss.

As mentioned; bad news must travel faster than good news. Getting bad news in good time is always better than a surprise when it comes to the management of risk. A key factor to mitigate the risk (or contain the impact) is having enough time to find an effective solution to the bad news. Success is to know that you have influenced your organisation’s risk culture by raising risk implications early in all relevant discussions and throughout the decision-making process! The future of risk management lies in an ability to incorporate and inspire more of the behaviors that we want- both the behaviors we want to encourage and those we would like to avoid.

Now is the time to start with Dynamic Situational Awareness as it relates to the effective management of risk.

Dynamic situational awareness is the ability to continuously perceive, analyse, and respond to the ever-changing environment around you. In today’s fast-paced world, where risks and threats can emerge suddenly, being attuned to your surroundings is crucial. This skill goes beyond simply noticing what’s happening; it involves understanding the significance of what you observe and anticipating potential outcomes. By cultivating dynamic situational awareness, you position yourself to make informed decisions quickly, enhancing your ability to manage risks effectively.

To develop this skill, one must engage in consistent practice and real-world exercises that challenge your awareness in unpredictable environments. Start by placing yourself in situations where you need to monitor multiple elements simultaneously—busy streets, crowded events, or even social gatherings. Focus on observing people’s movements, paying particular attention to their body language and the objects they handle. This practice helps sharpen your perception and trains your mind to process information rapidly, allowing you to detect subtle cues that may indicate a potential threat or opportunity.

Developing dynamic situational awareness requires a proactive mindset. It’s not just about reacting to what’s in front of you but also about anticipating what might happen next. This foresight is crucial in both personal safety and professional settings, where the ability to stay ahead of situations can make all the difference. By continuously honing your situational awareness, you become more resilient and adaptable, capable of navigating complex environments with confidence and precision.

“Make others succeed” is another key mind-set required for success in building a Risk Intelligence System. When we look to retain and attract people, we do so based on the skills they have – their aptitude; but when we fire people we do so, in about 90% of all cases, for their attitude.

So, what are the differences between aptitudes and attitudes?

  • Aptitudes are our potential to learn skills which we develop and hone through time. What works, you continue using. What does not, you strive to change. However, aptitudes alone cannot take you all the way through the path to success.
  • Attitudes determine what and how much you can do. It is like an engine; it can either slow you down or accelerate you whilst still going forward.

The fundamental difference here is that you can train people for weaknesses in aptitude, but you cannot train people out of an attitude weakness.  Attitude is internal to the individual and you cannot motivate a person to change themselves, they must motivate themselves to change.

Think about these, learn to thrive on bad news, practice the effective management of risk and don’t accept surprises.

This Article was orginally published by: The Executive Botswana: https://theexecutivebw.com/building-a-risk-intelligence-system/

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