Over the past many years, I’ve come across risk management publications and articles that have questioned the role that risk management plays in many organizations, these publications question the value that risk management can create or preserve. While there are quite a few publications talking about new tools or systems that risk managers can deploy or incorporate to increase effectiveness, very few talks about the strategic value of risk management.
I recently read an article that spoke about this same value add issues in the human resource profession in the early 2000’s. The human resource profession had the same questions about their profession; what value do they bring, what do they have to offer and more importantly, how can they become valuable to the company? Adding value will preserve them from the threatened budget cuts and terminations during economic downturns. After a few years of sole searching and discussions, the human resource profession decided to push for a change in the perception of what they can offer to the corporation. They identified the perception that they are the technical experts on human resources and are only called upon only when needed. They realized they needed to change this need from being the technical expertise to providing a strategic value. The profession decided to focus on changing the perceptions of human resources from technical experts to strategic partners. By being a strategic partner, human resources can aid in the hiring process, creating successful work teams, and employee training and development. The result is the human resource function is now viewed and used as a strategic partner and is no longer subject to threatened budget cuts.
For risk management, I must ask this question: is this where the risk management profession is today, in the same situation the HR profession was in many years ago? My answer, I’m leaning towards yes. The financial crisis of 2008 and 2009 highlighted the role of risk management as technical experts that were left on the sidelines. Repeatedly risk management was used as a scapegoat, with statements such as why did risk management allowed the financial crisis to occur. They are the technical experts, they should have been able to highlight the risks and prevent or at least minimize the risks. In my view, the risk management profession needs to start promoting the value of risk management as a strategic partner. The risk management trade organizations and advocacy groups need to create and promote strategies, plans and marketing materials to begin to change the perception of risk management, much the same way the human resources profession did in the early 2000’s.