The increase in legislation has led many financial institutions to review their operational risk framework, yet driving these projects to completion is proving tricky without the right financial risk management team. Here's our guide to building an effective team that increases business effectiveness rather than stands in its way.
Balancing risk mitigation with satisfying business requirements simply can't happen without the right finanancial risk management team in place. Poorly integrated teams can have a catastrophic effect and often get labelled the 'business prevention department' by their operational colleagues.
It doesn't have to be like this... but, given the complexity of current risk frameworks stretching right across Risk, Regulation, Actuarial and now day-to-day Enterprise Risk Management, it is impossible to build the right team by chance. It is impossible to build the right team by chance.
Integrate your risk management teams for better business performance
The critical component is integration, making risk relevant to your company. It is very easy for a highly skilled but badly integrated financial risk management team to deliver a risk solution that doesn't fit the company's practices, its objectives and its goal.
The right team does more than go through an intellectual exercise to put in a framework alongside your business: it puts the framework within your business - stripping out expired control points that are no longer relevant at the same time as introducing new ones designed to clearly demonstrate capital adequacy.
A well integrated risk management team will enable you to take out controls each time there is a change in regulation, not just add new ones.A well integrated risk management team will enable you to take out controls each time there is a change in regulation, not just add new ones. This will change its perception from obstacle to benefit.
Risk leadership demands deep experience, not just technical ability
Integration starts within the team itself. Strong direction is needed to overcome the clash of internal and external resource and competing framework areas. The lynchpin is the Risk Programme Manager or Head of Risk leading the framework.
These individuals need substantial experience leading multidisciplinary teams and suppliers within the Risk environment to be effective. We can provide you with these seasoned skills if you do not possess them in-house from our change practitioner community.
Risk leadership must blend with the operational culture of your business
Equally important is the cultural fit or personality of the Head of Risk. If they are to integrate Operations and Risk, they must be personable and credible enough to get on with the rest of the business. The word 'risk' immediately drags up fear of auditors in the psyche of operational staff, fear of being told that everything they have been doing for the last three years has been wrong and needs to be remediated.
The right leader for your financial risk management team will put people at ease and communicate effectively that everyone can win. This again is another reason that organisations turn to Practicus for risk management professionals, we have well defined processes for ensuring the right cultural fit with your organisation, people who have built a track record for winning people over and building success. The right leader will put people at ease and communicate that everyone can win.
Build a team around the leader
Every role is key in ensuring effective compliance and driving behaviour change within the business. It is unlikely that you or your Head of Risk will be able to do this yourself, even with considerable support from HR. Working with an organisation that understands your needs and the unique problems you face is one solution.
There are a range of options available to you: from agencies to consultancies, as well as organisations that fit neither category (this includes Practicus).
Key questions to ask yourself about a partner for risk management include:
- Do I need someone to help me shape the structure of the team?
- If so, how important is it that the partner understands the practicalities of delivering integrated risk management as well as the theory?
- Do I want high quality talent right across the team or just in key parts of it?
Your answers to these questions will determine which kind of business you need to support you in building your risk management team.
If you want unrestricted access to talent, you need an organisation that is not restricted to a permanent bench. But if you want someone who understands your business and can help shape the team, it is unlikely that even a high level agency will be able to help.
It is our belief that we offer the most rounded proposition if talent, structure and practical experience are all concerns for building your team.
Find out more by contacting Marc Patrick on +44 (0) 207 374 88867 or by contacting our Banking and Financial Services teams.
