Operational Risk teams: from behind-the-desk clerks to virtual multipliers

The wide-ranging spectrum of the Operational Risk discipline, covering deliberate or accidental actions of employees, malfunctions of systems, and broken processes, has always prompted questions about the skills of risk practitioners and the expectation that they need to be masters of all trades.

In addition to technical knowledge, extensive experience in risk frameworks, and regulatory and industry acumen, employers are increasingly looking for risk professionals with outstanding interpersonal skills.

Risk teams must be able to successfully relay their knowledge, communicate and engage with their stakeholders.

This idea was apparent pre-pandemic. A report by Deloitte Access Economics suggests that developing and enhancing soft skills is key, as by 2030, soft-skill-intensive occupations will account for two-thirds of all jobs.

Gone are the days of behind-the-desk introverted risk clerks checking spreadsheets. One cannot instill a robust risk culture throughout the organization when only the risk department itself is capable of managing risk.

Consequently, a relatively small number of risk professionals must actively reach out not only to provide the necessary tools but also to energize employees within the firm in order to multiply the power of risk management.

In her inspirational book on leadership, Multipliers: How the Best Leaders Make Everyone Smarter, Liz Wiseman talks about leaders that bring out ‘the intelligence in others’ and create ‘collective, viral intelligence’.

The same concept applied to leadership can be extrapolated to describe multipliers in corporate risk teams.

What differentiates operational risk multipliers? Recognizing that they cannot do it alone, they thrive on collaborating with the first line business units and support functions, actively positioning them for success. They are informal, approachable and likeable. They spend a significant portion of their time engaging with their audience and making full use of formal and informal channels. They further educate and facilitate risk workshops, and provide advice, listening to concerns as well as spreading knowledge.

COVID-19 and a work-from-home (WFH) environment have challenged the outlook of risk management even further. Due to WFH, which is now likely to remain long-term in some form, risk teams had to quickly learn how to become virtual multipliers.

Undeniably, engaging and multiplying virtually is more challenging. A very important informal communication line is strained; no chats at the watercooler or quick coffee breaks. So how do you become a virtual multiplier and is it even possible?

Successful risk teams applied situational awareness and attempted to adapt to the ‘new normal’. Recognizing the power of maintaining close contact, they began to proactively reach out to stakeholders with a ‘virtual coffee’ value proposition. They further developed high-quality, relevant training for end-users and used technology solutions to their advantage.

They utilized all possible interactive features such as live polling from Mentimeter, the meeting revolution solution from Klaxoon, and many other available in the market. They even took initiative to lead virtual focus groups, identify threats to corporate cohesiveness and consider how risk culture can be transformed beyond crisis.

This is still new; more thought is needed on how to develop and foster successful virtual risk multipliers.

Why are the virtual risk multipliers so important to the organization? Their crucial work leads to a better understanding of the changing risk and control environment. Much has been said about increasing risks, such as information security, fraud and market abuse during Covid-19. Undeniably, basic controls have also deteriorated. Firms went with continuity over controls, a necessary step to enable a quick shift to WFH.

As a result, face-to-face supervision and physical oversight had to be relaxed. Ongoing engagement with employees to discuss risk and control environment is an important way to keep your hand on the pulse, providing transparency to the boards and senior management, and allowing the firm to be one step ahead of the crisis.

This, in turn, increases the operational resilience of the organization, as an outcome of operational risk management. COVID-19 is symmetric, affecting companies across the globe in a similar way. It is also prolonged and slow-moving, which means firms have the opportunity to adapt, learn and enhance their practices.

In the future, different types of disruptions that are firm-specific and sudden will inevitably occur. Organizations that build sound risk management capabilities will emerge stronger than their peers.

These robust risk management capabilities cannot be developed without successful risk teams - virtual multipliers - who are at the heart of the firm, carrying out the crucial task of multiplying the power of risk management.