This article is written by Kate McHugh, risk management advisor at department of conservation at the Government of New Zealand

Risk leadership is a particular skill set that enables quick and highly effective decision-making in complex organisations.

Decision-makers, at all levels and at most organisations, work with a degree of uncertainty framed as risk. Because of this, they need to ensure their decisions are well-reasoned and are able to withstand scrutiny before and after they are made.

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In the decade I’ve worked in risk management, I have come across organisations that boast very colourful risk registers, sophisticated heat maps, along with bold policy statements which, however colourful, sophisticated or bold they might be, fail to demonstrate how they’re of any use.

Tools and tick box exercises that aren’t fully understood or are under-utilised don’t provide very much value. And, if those at the top of your organisation don’t see value in risk management, then those rising up won’t either. This is important for public servants like you to know, no matter where in the chain of command you currently perch.

The solution to the problem of complex risk tools is what is known as risk leadership.

What it is, how it works

This is a top-down approach that looks not only at leadership by example, but at making sure examples in leadership can be set at any level. Anyone can be a risk leader, but it’s the strategic managers of an organisation that lead the charge.

Strategic risks viewed in a landscape style cascade to those at different levels, ensuring a link from strategy to operations. From the executive leader’s conceptual thinking, to the day-to-day work carried out, there is a link to the risks being managed all helping achieve an organisation’s purpose.

This does not mean accountability is delegated arbitrarily or interchangeably, with the buck never stopping with anyone in particular.

Rather, risk leadership ensures responsibility still sits within the limits of discretion set by the risk owner, but that the subject matter experts in the control environment, treating the risk, have agency.

Risk leadership raises the maturity of people’s risk awareness within an organisation by encouraging them to think about risk as a logical lens to cast over all work rather than an individual agenda item, or piece of work, to be ticked off.

Risk leadership also acknowledges that whether or not people know it, much of what they are doing in their day-to-day work is in fact risk management.

At its core, risk leadership centers on simple forms of communication; those that:

  • Escalate – risks that fall outside of the top level of your limits of discretion should be elevated to an appropriate person at an appropriate level to own
  • Cascade – managers who delegate the responsibility for the control environment and mitigation strategies down the line as appropriate, and
  • Translate – risk owners who communicate across the business hierarchy to those impacted by the risk and what to do about them. This ensures an organisation doesn’t waste time putting out the same fire with a series of uncoordinated efforts.

While risk registers and their kind have a place for those who use them wisely, risk leadership looks at a more holistic method of delivery.

Why risk leadership matters

All large organisations have systems and subsystems, all of which creates a rabbit warren of complexity. Using the three principles of risk leadership as an excavation tool, these systems can help break down rather than reinforce siloes, leading to more effective collaborative efforts between public sector agencies.

Risk leadership also acknowledges that whether or not people know it, much of what they are doing in their day-to-day work is in fact risk management.

That’s where a holistic approach based on a common language is apt to accommodate the fast-paced, flexible world we find ourselves in now. Put simply, 80s-style matrices aren’t going to cut it anymore.

So, how should you or your employer start initiating a risk leadership approach? First, you have to start seeing risk as being at the core of delivery for your organisation. Once behaviours based on this recognition are embedded at the top, the “cascade”, “escalate”, and “translate” principles fall more easily into place. The result is better decisions that are more able to withstand the type of public scrutiny public service organisations come under all the time.

Let’s not kid ourselves that what I’ve introduced to you in this article is a fast fix-all. It’s a long journey, but those who don’t start their engines early will take more dangerous risks later on. — Kate McHugh

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