“It is not the absence of risk that determines a program’s success but the manner in which risk is identified and managed”
Dear readers, last week, I looked at the need to get the image of the risk personnel rebranded. At many training sessions, I witness the usual banter between the compliance/risk staff, and the business development, sales and marketing staff. A recent training session gave me more insights into the extent of division between these “opposing” parties within the same institution. Although it was a healthy debate, there is a need to address the perception that each party has of the other one. Whilst sales and business development staff have the targets to achieve and concentrate mostly on the bottom line figures, the risk and compliance guys are also following and trailing their steps dotting all the ‘i’s and crossing all the ‘t’s. There is always the need to neutralize these with professionalism, excellent service delivery as well as ethics, to ensure the institution is well covered at all fronts. How can these be effected….through the rebranding as well as the exhibition of some characteristics expected of the new breed of risk managers, to make them more ‘acceptable’ in the organizations. Let us continue…
CHARACTERISTICS OF RE-BRANDED RISK MANAGERS.
Transferor of Knowledge
As a result of researching, scenario analysis and awareness level of risk managers, it is their duty to be teachers and transfer relevant knowledge of the subject to all staff in the bank. Knowledge shared is like “agape love”. It is protective, preventative, devotional, and all other benefits there are that makes a group have a sense of belongingness. In short, it shows that you care for all. Lack of knowledge sharing is like a teacher who does not teach well, but revels in the failure of his or her students. Every man’s success is in the hands of another. You would be able to achieve success by helping to solve problems of those who are in need. It is said that a problem shared is a problem halved. One can liken the role of the risk manager to an evangelist. You will be surprised that staff who do not work directly with the risk manager may gravitate towards him or her for problem solving in an informal way. The risk manager who works closely with the identified “Risk Champions” in the various units and departments will find him or herself working as a team with a united purpose, thereby reducing any knowledge gaps.
Be Independent – “Don’t always be a yes man”
Even though risk managers should flow with the tide, they should also be bold enough to say no. Being afraid to assert one’s self in critical times makes the risk manager impotent. If every person in the bank is preaching the same message, some type of checks and balances are needed to ensure the success of the bank. This is the job of a risk manager, that is, to be the independent assessor of problem areas within the bank. Teamwork and collaboration is good but when the danger signals are showing, just be honest and explain your position in a professional way without being labelled “AGAINST”. To be honest with you, I have always loved staff who are able to be honest with me and express divergent opinions in a professional way. I am not too comfortable with “yes men’ or “yes women”. Risk managers must be willing to expose some of the bank’s dirty linen, but of course not in public. However this should be done professionally with sensitivity to the external environment and politics. Regular sweeping of bad news under the executive rug is an avenue for disaster.
The Change Maker
What do I mean by this? How can risk managers move away from their traditional role to become change makers? Yes, I am serious about that. Risk managers should be part of the movers and shakers in a company that wants to move forward. What is the point in isolating the risk manager and bringing new projects for their attention only at the last minute? Obviously, the “Against” label will be immediately tagged to him or her. A risk manager who is made part of the team will not be an “against” but rather be one of the team members who will lubricate the wheels of the process and keep all the juices flowing. Am I making some sense at all? I hope someone is listening. Try it and see. Can you imagine what happens when the Marketing department’s submission of a huge budget for some projects brings opposition from the Finance Department? A risk manager should investigate the basis of the two department’s position and build the bridge which can eventually become the game changer.
This characteristic has already been mentioned in my previous article, but I still need to stress it again to flow with the paradigm shift expected from bankers as well as the risk managers themselves. There is no “one-size fits all” solution to establishing a risk management process. The risk manager should be able to adapt processes, structures, decisions, and even his or her own behavior to the organizational culture. This means creating a balance between ensuring compliance and adapting to the realities on the ground in the industry. I believe in not just “cutting and pasting” processes adopted from other institutions in the industry, but in addition, customizing, massaging and aligning new processes to suit the business environment. Let us take a look at the dynamism of retail banking in Ghana. Some branches of the same bank are located in very remote countries while others are in the ‘high class’ section of the capital…which is of late, the “Airport City” of Accra. This is out of the way of the average Ghanaian. Although risk management has its generic systems, managing risk in these two contrasting branches require some adaptability to make it work. The risk appetite for the various risks are usually the same but for some areas, additional zooming and study of the local conditions are required to make to make the application of some monitoring tools realistic. Yes. Indeed the risk manager should be adaptable and not ‘stiff’ as they are sometimes labelled.
A Good Communicator
Since risk is surrounded with uncertainty it can be confusing at times. A successful risk manager should exhibit good communication skills and use simple language for easy assimilation by all stakeholders. Processes need to be ‘idiot-proof”, broken down into simple terms and basic enough for the various levels of staff to appreciate, and reduce errors. Risk managers should therefore be seen as ‘BUSINESS ENABLERS.’
A Person with Integrity
Many bank staff get disappointed when persons who know the “ins and outs” of banking, fall fowl of the banking rules and deliberately show unethical conducts. The first question asked is “Ahh, but shouldn’t he/she know better?” Banking is a human institution with its accompanying human errors. However a risk manager must practice what he or she preaches or writes about. Let us look at cases where auditors are transferred to manage certain operational areas. What happens? Subsequent audit findings reveal worse lapses, leaving others confused. People ask “During their previous audits, were they just listing the audit findings just for scoring marks? Yes, the risk manager should be associated with integrity. Mean what you say, and others will respect you.
A recent survey conducted by Active Risk Inc. indicates that “… While the traditional view of risk managers is that they are overly pessimistic, analytical, logical, and focused solely on facts and data, a growing trend of risk managers possessing skills outside this stereotypical set suggest a new appreciation for the strength and value of risk management within an organization. No longer are risk managers buried within an organization and rarely made part of strategic-decision making”.
A risk manager is the link between all departments within an organization. Effectiveness comes from a complete understanding of the organization, its objectives, and the people who make the organization successful.
The re-branded Risk Manager…….A Person with Many True Colours
- Flow with the tide, but with caution.
- Don’t be stuck in the box. Think outside the box and find the next best practice.
- Think globally but act locally.
- Don’t get stuck in the mud. Ease yourself out and look ahead for the next dry spot to move your team to.
- Be a strategic leader.
- Get updated and don’t surround yourself with just policies and procedures.
- Be adaptable…banking is dynamic
- Avoid re-engineering of the wheel.
- Update yourself and be knowledgeable about your industry.
- Do not use old solutions to solve new problems.
- Don’t be too all-knowing. Share and listen well to others.
- Don’t be a “yes” man or woman. Be real and justify your actions. Know your limits to avoid a tidal wave.
- Play an advocacy role and train risk champions to spread the gospel.
I hope all risk managers take a cue from some of these things so that others will regard them as true Business Enablers and not Wet Blankets. To all risk management staff, get closer to your staff and play your cards well, for you will remembered for leaving a good legacy.
ABOUT THE AUTHOR
Alberta Quarcoopome is a Fellow of the Chartered Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.