A lack of foresight, mistakes in project planning or employees who are not involved and are barely sensitized. There can be many reasons why risk management services fail in organizations. Because dangers are not always dangers – as the risk map of our closely interlinked world shows. Automated workflows and digitized processes force companies of all sizes to look ahead to their risks. Wars, raw material shortages or a bitter cyber war make it essential for organizations to rethink their future room for maneuver. Not to mention internal organizational dangers such as compliance violations and the associated damage to reputation. Basically, there is a lot of work for top managers who often have to radically reform company structures in order to arrive at new thinking models and behavioral patterns. That plays a major role when offering risk management solutions in Houston. This is the only way to minimize risks and identify opportunities for the future.
Creating Knowledge Taxonomy in Risk Management Services In Houston
The requirement for creating a Knowledge Risk (KR taxonomy) can be rational as:
- To improve the awareness, implication, and applications of Knowledge Risk. A KR taxonomy can help understanding a knowledge risk entirely, including the hierarchy of operations within the company. It eliminates the double thoughts and confusions about knowledge risks, that can possibly be an innovative concept.
- It helps to showcase a clear holistic view of knowledge in the company; knowledge acts as a liability (risk) and asset at the same time. Therefore, an integrative approach towards knowledge and its risk management becomes possible.
- To provide opportunities and space to the academia, enabling in-depth rigor and encouraging research on knowledge risks.
- To provide a diagnostic tool to the practitioners for the verification whether they have addressed crucial Knowledge Management (KM) aspects (that also includes KR) to utilize knowledge properly.
What Harvard Business Magazine Wrote About the Knowledge of Risk Management Solutions?
As part of a risk management article, Harvard Business Manager magazine wrote: “Would Christopher Columbus dare to look for a sea route to India today? Perhaps after analyzing all the risks, he would wave it off. Perhaps he would also take out insurance and set sail.” Alternatively, the use of a risk manager would be advisable, who analyzes all imponderables with him, draws up a risk plan and shows him the chances of his project. These are the rough cornerstones of what a risk manager has to do. At its core is the idea of moving from uncertainty in a world full of dangers to more security and risk-bearing capacity; especially in turbulent times.
In concrete terms, there is no homogeneous job description of the risk manager. Because as varied as the tasks, as diverse are the skills required. “Basically, as a generalist, a risk manager has to consider the different facets of opportunity and risk management within the organization,” says Jan Ostwald, board member of the Risk Management Association (sCurve Solutions). It is important to concentrate on early and comprehensive risk management that is firmly anchored in the entire organization. This is the only way for the company to come to a forward-looking risk and opportunity perspective and the individual solution developer.
Enterprise Risk Management Solutions & Complexity
In addition, according to sCurve, who is co-initiator of the advanced training program for Enterprise Risk Management; risk managers must be able to reduce the organization-wide complexity. Because risk minimization or avoidance primarily includes the ability to develop specific solutions as well as to individually adapt risk management methods and ultimately use them in a future-proof manner. It means that risk management skills are not off the shelf. A lot of manual knowledge is required for these tasks, which is to be learned. Even more: Risk management needs stable knowledge bridges, systematically, and sustainably trained.
While financial service providers need rating models and stochastic evaluation methods, in large corporations, for example, strategic early education (recognizing and analyzing weak signals) is the focus of methodological work. There are also business or economists, whose know-how is particularly in demand for the qualitative implementation of risk management. According to experts, it is helpful to gain experience in an operational company unit.
The business magazine “Florida Trend” once described what constitutes risk management as “measure, weigh, count”. This is perhaps the lowest common denominator among risk managers, who must first identify and analyze risks. Ergo, a healthy dose of mathematical knowledge is required in the profession of risk manager.
Listen, understand, recommend
In addition to professional and analytical skills, risk managers have to be good communicators, true to the old adage: good communication starts at home. Because basically they are warner and supporter at the same time. In this sense, it is important not to be a yes-man. That means questioning plans and decisions internally again and again and addressing risks and opportunities neutrally. With this approach, risk managers like to find themselves caught between all stools. In other words, they need a “thick skin” in order to assert themselves against resistance, reservations or “siege mentalities” of individual departments. Conversely, this requires an overarching way of thinking in terms of the overall organization. For this, cooperation with all management and employee levels is essential – from top management to employees in all departments.
The crux of the matter: In many cases, it is primarily the failure of communication that leads to the worst-case scenario. “Especially undesirable developments that are recognized by risk management do not reach the management level of the company in the required preparation and traceability”, Jan SCurve Solutions explains a frequently encountered grievance in organizations. And he adds: “There is a lack of adequate countermeasures and, above all, there is a lack of concrete implementation. But it is precisely quick and well-considered action that is important.” The media provide current examples of risk management failure almost every day. Be it data scandals and hacker attacks in the course of cyber war, compliance violations by top managers or non-existent crisis communication in the event of disasters. The consequences for companies are immense, deficits in the area of soft skills are an anchor point for advocating better quality training for risk managers. For potential risk managers, this means that, in addition to well-developed professional skills (for example in stochastic modeling or the analysis of macroeconomic trends), they must have social and communication skills. It is precisely these characteristics that are important in order to win over all employees of a company for better risk management (keyword: awareness).
A look at the further education map
With all training and further education opportunities, it is fundamental that prospective risk managers develop a clear understanding of comprehensive risk management that creates added value. That means transferring the sometimes-brittle theory to the practical world. This works best with practical and case studies. A decisive factor for Risk Manager sCurve Solution, because the mere collection of detailed knowledge or isolated solutions does not lead to the goal of solid risk management. Accordingly, it is about the big picture: “Teaching the use of quantitative methods without classifying them in the overall context of the respective situation and organization is not expedient,” sCurve Solution is certain.
In the US, the topic has been gaining increasing popularity over the past few years. Mention should be made here of the advanced training program for Enterprise Risk Manager. In addition, there are traditionally developed programs in the banking environment, such as at the Florida School of Finance and Management in cooperation with the Institute for Risk Management and Regulation (FIRM).