“When we don’t challenge and ask the right questions, we create risk.”

Those were the words of RiskNZ CEO David Turner (pictured) when he sat down with him Business insurance To talk about the future of risk management and how he believes leaders should approach this function to achieve optimal results.

Risk management from the top and in all areas

In Turner’s view, risk management is directly linked to company leadership, which means that the amount of discretion given to risk management from the top is crucial.

“Leadership is the biggest influence on risk management now,” Turner emphasized. “If leadership doesn’t understand how important risk is, risk management won’t get the right attention, it won’t get the right support, and it won’t get the right funding.”

Most importantly, according to the RiskNZ CEO, it is understanding leadership that will lead to the big questions to ask. For example, boards need to weigh risks more, know what they are reading, and know how to ask questions appropriately.

“If leadership doesn’t understand how to read and challenge risk management reports, risk management can go wrong,” he said. “Leaders need to understand risk management across their organizations, not just pay lip service to it.”

Turner noted that although risk management teams may have experience and expertise, leaders cannot rely solely on them to guide the company’s direction.

“They need help making logical, calculated decisions,” Turner declared. “If they don’t, the organization just goes ahead with what it is told, and this has become a habit in some organizations.

“Risk communication and advice may typically come from a department or small team within an organization that cares about risk. Effectively, this risk team influences the course of that organization.

Risk management: questioning and challenging

The CEO explained that it is usually less a matter of trust or competence, and more a matter of realistic “checks and balances” and accuracy.

“Good risk management is two things,” Turner said. Business insurance. “It’s an interrogation and it’s a challenge. This is real risk management. The third thing is good communication. We tend not to take enough time to find out why and how things are decided in risk management, and why we choose the mitigations or paths that we do.”

“Too often we take information and say it must be correct, which sometimes leads to the wrong decision. We need to look at the risks and the root causes of the risks more closely. It may be uncomfortable for some, but this is good advice, i.e. To investigate, and when needed, challenge the status quo and ensure the correct information is provided, and evaluate from there.

He continued, explaining: “In some organizations, risk managers and their teams have a good, broad understanding of what they should be looking for, and they look at all the risks and issues they can look at from point A to point Z, and they look at them and prioritize what they should be looking for and they do that.” Well, other organizations may not have this broad understanding.

“Some consultants also need to make sure that not only are great ideas being presented, not just selling hopes, but real, realistic solutions, specific objectives and a good level of substance are being provided that not only meet regulatory needs and expectations but also help improve our risk industry. I think that We have a way to go yet.

“So, the best thing we can do is to ask and make sure that we are on the right track, that we are all looking at the right things, and any kind of concerns or queries are answered. Also, are we using the right technologies and what technologies might we need in the future ?It’s not about threatening, it’s about ensuring that there is a board…that’s all it is – it’s a guarantee – but we need to practice that more as we move forward as organizations.

Risk managers as effective communicators

On the risk managers side, Turner noted the need to be effective communicators as part of their remit.

“It is not enough to be a good risk manager, be able to provide reports, make good assessments and go beyond them,” he said. “That’s only half the battle. We have to know how to explain risk management to everyone in that organization at every level, how to educate on what risk means, how everyone can use it, and what to look for and ask for.”

“And also, we should write it in a way that people can easily understand in layman’s terms about exactly what we’re finding, what the real risks are, so that people have opportunities to look at that and ask questions again. The biggest risk we face in some organizations is the risk management team Same, where maybe they made it too complicated, and people can’t understand it.

“The less we understand something like risk management, the fewer questions we ask and the more we accept, so we take more risks, miss good opportunities, and don’t get exactly where we need to go. It doesn’t make everyone in the organization an expert, but it certainly makes sure There is usually a good conversation about risk management and everyone appreciates it for what it is and this leads to successful risk management.

In a complex world where we are seeing increasing change, Turner believes a risk manager’s job will be easier if he continues to learn to gain broader knowledge, while ensuring he can then communicate that knowledge.