Innovation Sets the Stage for the Future of Risk Management
After a protracted period of operating in survival and stabilization mode, CEOs are turning their attention to growth and transformation. Risk leaders know that effective risk management is vital to support this strategic shift. Yet a survey of risk leaders reveals that risk teams are not yet equipped to support this transition. In addition, the majority of risk leaders (59%) believe that improved risk management will be critical to protecting their business and building value in the next five years.1
Developing an innovative mindset is one way that may help risk managers position themselves for greater success in a changing environment. Because risk management has become more digital and data-driven in just the last few years, it is more difficult than ever to keep up with new techniques and technologies. Becoming more innovative expands the reach to more exploration of what may or may not work in different settings.
Three Steps to Developing an Innovative Mindset
- Be curious. Nurture your eagerness to learn and explore because curiosity is a key characteristic of an innovative mindset.
- Become well-versed in “Test & Learn.” An innovative mindset isn’t as natural for people as many imagine. Innovation is inefficient; people will fail because they are trying to do something new and it is not clear that the idea will work until it is tried. Yet people are often uncomfortable with failure. Adopting and promoting rapid “Test & Learn” explorations helps work teams become more comfortable with failure, ultimately leading to successful innovation.
- Leverage your risk expertise. As you manage innovation in the digital era, apply “Test & Learn” to new risk management technologies as they come into the market.
The drive to use digital analytics means risk managers now have access to more leading indicators of impending trouble than they had in the recent past. This creates the opportunity for proactive prevention to become a more important part of risk management than focusing mostly on fast reactions and fast cures.
More innovation can help risk managers take full advantage of this shift in emphasis from post-incident to pre-incident. It is important to develop the proper mindset before deciding which tools, techniques or methodologies to adopt.
- First – The right mindset helps risk managers increase their comfort level with innovation.
- Next – “Test & Learn” new data tools and techniques that help risk managers recognize their own risk trends that they might not otherwise see.
- Then – Draw meaningful connections to their organizations.
Sources:
1 https://www.ey.com/en_gl/risk/how-risk-managers-can-pivot-from-stabilization-to-transformation
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