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The
1990s: The Decade
of Risk Management
(Part 2 of 3)
Risk Management in the l990s
Risk managers will be
whatever they can convince Corporate America they can be. Form will follow
function. New functions will offer unprecedented opportunities to apply risk
management principles.
The traditional
definitions are limiting and no longer support risk management in practice.
Emphasis needs to be placed on the mission rather than the process. The new
combination of mission and process will emphasize the unique contributions of
risk management rather than show it is dunes An entirely new platform must be
constructed, universally adopted by the risk management community and carefully
promoted to Corporate America.
The platform must build
its foundation on the risk manager's unique experience in managing
interdisciplinary skills. It must be flexible enough to allow for the
significant variations that exist among and between diverse business
organizations, independent departments and numerous layers of management. It
must be creatively drafted and promoted to avoid criticism from competing
disciplines.
The new mission and
process are designed to help overcome built-in corporate barriers to
effective risk management. It is the unique ability to coordinate
interdisciplinary skills that is today's risk manager's strongest suit!
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The New Mission
The new mission is to
select, coordinate and efficiently apply interdisciplinary skills to harmful
uncertainties which may diminish the future value of public, private or
personal resources.
It is important to note
that all reference to the word unmanaged has been avoided. This has been done
for several reasons. Manage is the most overused and abused word in the
business vocabulary. Second, the word strongly implies traditional
authority/responsibility exchanges. The mission statement requires the
application of skills possessed by other managers. It is political folly to
suggest that a risk manager direct (i.e., manage) an attorney in matters of
law or a treasurer's financial activities. Finally, the omission of manage is
liberating It permits a risk manager to turn the reporting pyramid upside
down in order to tap the unique skills of the best and the brightest within
the organization, irrespective of rank or structure.
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The New Process
The new process is the
measured application of the five descriptors (See Photo). Each one-word
descriptor is a symbol for a much broader concept. The descriptors comprise
the fabric of the process. Together, they are used to build networks among
otherwise independent disciplines.
The common usage
definition for each descriptor is:
- Investigate - observe or
study by close examination and systematic inquiry;
- Inform - give material form
to;
- Influence - affect or alter
by indirect or intangible means;
- Interpret - explain or tell
the meaning of; present in understandable terms; and
- Integrate - form or blend
into a whole; unite with something else.
The common usage
definitions are only a starting point. Each risk manager must apply his own
unique interpretation to the descriptors, in light of the new mission
statement and the task at hand. The advantages of descriptors may be
summarized as follows:
- Definitions not required;
- Support use of malleable
matrix rather than linear model;
- Support mission statement
interdisciplinary theme;
- May be universally accepted
but individually applied;
- Allow for future
interpretation and development; and
- Support management trends
toward downsizing, fewer layers of management and less formal structure.
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New Opportunities
As a practical matter,
the new risk position will become a repository of corporate related risk
functions - functions which demand the intense coordination of
interdisciplinary skills.
New functions may
penetrate other corporate departments and be integrated at different
managerial levels. Opportunities may arise out of:
- Mergers, acquisitions and
divestitures;
- Environmental exposures;
- Security;
- Crisis and business
resumption planning;
- Benefit financing;
- Information exchange;
public relations/damage control; meet;
- Contract control/word
control;
- Quality control and product
design;
- Futuristic planning and
product develop
- Efficiency, ergonomics and
value engineering; and
- Personal/personnel risk
management.
NEXT: 1990's: The Decade of Risk
Management
(Part 3 of 3)
An
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