Risk management may seem simple enough in theory, but not all employees have the necessary skills and competencies to successfully apply it in practice. One of the key components in driving change is employee training and development.
Include the principles of risk-based decision-making in induction training for new employees
New hires come from a variety of education and experience backgrounds and most importantly, each new employee has their own perception of what is an acceptable risk. It is important for risk managers to cooperate with the Human Resources department or any other business unit responsible for training, to jointly carry out training on the basics of risk management for all new employees.
One of the risk managers we interviewed mentioned that the risk management induction should not be long. It should take about ten minutes and include the basics of business and investment decisions under uncertainty, key risk management roles and responsibilities and the ISO31000:2009 risk management principles as per the company’s Risk Management Policy.
Examples of free risk management training slides can be found here >
Conduct training for senior management and the Board
Tone at the top is very important for risk culture development. Executives and Board members play a vital role in driving the risk management agenda. Nowadays many executives and Board members have a basic understanding of risk management. Auditors, risk management professional associations and regulators have been quite influential in shaping the Board’s perception of risk management.
Unfortunately, not all the messages communicated by the auditors and regulators are sound and some are downright wrong. For example, one of the government agencies in Russia published a guidance document that encourages companies to have a standalone risk management process and in many ways contradict the core principles of ISO31000:2009.
It is important for the risk manager to take the lead on forming the Boards and senior management view on risk management by providing risk awareness sessions and relevant information. Here are some of the most important messages risk managers need to include in their communication with the Board:
- Decision quality and how people make decisions under uncertainty
- Positioning risk management as a tool to help management make decisions
- Risk management should be an integral part of existing business processes and regular management reporting, not a standalone quarterly or annual activity
Risk management is not about avoiding or minimising risks, it’s about making informed decisions.
It may be appropriate to bring in an independent advisor to conduct risk awareness training for the Boards and senior management to reinforce the messages shared by the risk managers internally.
Alex Sidorenko, Owner and Chief Risk Officer, Risk-Academy
Alex Sidorenko is an expert with over 14 years of private equity, sovereign wealth fund risk management experience across Australia, Russia, Poland, and Kazakhstan.
He is the owner and Chief Risk Officer at Risk-Academy, which provides risk management education and consulting services, and the Risk Management Advisor at Neironix.
In 2014, Alex was named the Risk Manager of the Year by the Russian Risk Management Association.
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