Traditionally, risk has been a protective function within a business, preventing it from appearing in the press for all the wrong reasons. While this role is valued, it can also prompt a feeling that the risk function slows down innovation and progress.
In an environment in which businesses everywhere are trying to better understand new and emerging risks and confront these as soon as possible, risk teams find themselves in a unique position. A risk function has the opportunity, with the right technology, process, and people, to provide game-changing insights to help management and the board identify, avoid, and navigate future crises. It’s crucial that risk functions respond to this moment in time and evolve to a position where it can confidently take a seat at the leadership table.
However, while risk leaders are aware of the need to transform during these demanding times, they may feel challenged in their pursuit. After all, change in itself entails risk. Risk leaders, as much as others across the business, are already trying to do ‘more with less’. They may ask - why complicate a function that’s already taxing on staff and resources?
Many factors that appear to be blocking change can be easily addressed. There are three, key challenges that all can be overcome with the correct approach and the right advice:
- Lack of vision
- Silloed focus
- Daunting nature of the task
Once leaders realize that the answers are available, the question becomes not ‘if,’ but ‘when’ are we modernizing the risk function to enhance trust in our business? In this blog, we will explore three frequent blockers and look at how the right operating model can help overcome them.
1. Lack of ‘self value’ and vision hampering transformation adoption
The first seemingly, insurmountable block is often a lack of internal vision – failure by the business and colleagues to understand the ultimate goal and potential role of the risk function. This may not just block evolution, it may stop it from starting altogether. If leadership and peers cannot grasp the purpose, they are less likely to adopt change.
The first thing to do is to change your output to proactive from reactive. Know that you are an enabler of progress, not a barrier. Add to this the introduction of a sector-leading innovative and technology-led risk transformation, and you have a compelling story to invigorate yourself and your team. There are new opportunities to strategize and support the business. For example, as the business designs and conducts risk assessments or first line control testing, they can seek the advice of risk and compliance professionals in their organization on inputs and outputs. As the business encounters escalating risks or actual issues, they might seek advice on reporting channels for proper escalation as well as guidance on remediation activities to address the risks and issues.
The opportunities to support are there for the taking.
In another example, if senior executives struggle to make informed decisions because existing risk technology can’t keep pace, then transformation will help solve that problem and quickly offer more trusted data and proactive insights than ever before. Gaining their trust by outlining these benefits will be pivotal for change. By embedding that confidence, your business, risk and compliance professionals all have an integral role in the design of their future.
Last, but definitely not least, is the potential for earning and retaining customer trust. In today’s marketplace, where consumers are more discerning than ever before, ensuring their loyalty by shoring up risk is fundamental, and game-changing, for the future.
2. Siloed focus; without looking at organizational change
Evolving and revitalizing the risk function is daunting. It may be tempting to focus internally while ignoring other functions. Risk managers may believe that attempting to integrate a transformed function into the wider organization while adopting new processes and technologies within the team is too challenging. This notion might lead to a transformation that fails to deliver a real enterprise-wide step-change.
This challenge, too, can be straightforward to address. Trust is again a key factor here. Risk leaders should be reassured that ingraining improved risk management across the whole business can inspire and consolidate trust across the whole organization. Bringing formerly siloed teams into the conversation together means risk change-agents can learn what the business needs from them, embed these requirements into their new function, and seamlessly bring everyone on the same journey.
For example, a truly enterprise-wide and transparent issue management solution – with standardized roles, responsibilities, processes, data and reporting – helps ensure that risk leaders have a unique vantage point from which to work across the whole organization, helping colleagues to respond to risk together, rather than individually. By working collaboratively in real-time, this transformation will bring a more holistic view of risk for everyone, making it easy to entice colleagues around the business to support the change.
3. The risk function is ‘too complicated to fix’ with a simple solution
Finding a solution that can handle the complexity that the risk function represents, is a surmountable challenge. With a solution like KPMG Powered Enterprise | Risk, business leaders can work efficiently towards future-ready solutions within their transformation in a considered and controlled manner. If you’re holding onto legacy technology, wanting to lift and shift, or set on inexpensive but inflexible solutions, you’ll be stuck in the headlights, so let a leading practice solution help you wipe the slate clean. The KPMG Target Operating Model (TOM), that addresses people, process, technology and governance among its change pillars, will guide you to success.
The Future of Risk
There’s a remarkable, expanding world of innovation at our fingertips, and it’s time for risk functions to overcome their reputation as a barrier to evolution and become the proactive protector of a safe and trusted organization. With a leading practice operating model and the best team in market, KPMG Powered can help get you to this position with lower risk – and we know you like that!