Beyond Risk Intelligence: Leading for Risk Insight

By Eric J. McNulty, Associate Director, National Preparedness Leadership Initiative, Harvard University

The race is on. With the rapid deployment of new artificial intelligence (AI) supported tools, risk teams will be able to gather more data from more sources, analyze it more quickly, and present it in more compelling ways. At a time of seemingly continual disruption, that is key. One challenge will be keeping up with the latest capabilities. Another, perhaps more daunting challenge, will be to ensure that the organizations those risk teams serve can comprehend what they face and adapt accordingly.

The first test is a technical one that calls upon risk professionals to practice their specialty at its best. Many individuals, I am sure, will be energized as they explore new and powerful ways to glean greater understanding of the risk landscape their organization faces.  The second task—to truly lead—calls upon a different set of skills, one with which even senior risk professionals may not have extensive experience. It is the human factors of motivation, communication, and persuasion that must be mastered.

The reaction of organizations to more extensive and nuanced risk analysis will array along a continuum. At one end will be those firms that freeze. They will be overwhelmed by the thought of threats around every corner, become more risk-averse, and slow down their exploration of new opportunities. At the other end will be those that, similarly overwhelmed, become more risk tolerant because they don’t want to be bogged down by fear. They’ll worry about their traditional major hazards and take their chances with the rest. “Don’t worry. It won’t happen to us,” is one of the more common excuses my colleagues and I hear from those who would rather avoid difficult discussions about mitigation and preparedness.

The sweet spot, of course, lies somewhere in between the extremes on that continuum. These are the organizations that will respond thoughtfully rather than react as their awareness grows. They will seek risk insight—risk intelligence plus deep understanding of what it means—as a critical ingredient of competitive advantage and resilience.

To ready the firm to embrace risk insight, Chief Risk Officers and other senior risk professionals will need to practice what my colleagues and I call meta-leadership, thinking broadly and leading beyond the traditional boundaries of risk practice (hence the prefix “meta“). It calls for wielding influence far beyond their formal authority.

The journey starts with leading “across” to their peers in other parts of the organization. Assuming that they have a good knowledge of the business, risk leaders can use the proven methodology of “Aha!” – here’s something you didn’t know; “So what?” – this is why you should care; and “Now what?” – a collaborative exploration of steps to be taken. This is more than a data dump. It is identifying risks and helping do something about them. It ensures risk relevance.

The next step is leading “up” to the CEO and potentially the board of directors. These individuals are accountable for short-term results as well as long-term strategy. They will be hyper-sensitive to the ROI on the investment in new tools. Bringing the C-suite a collection of the “Aha,” So what?” and “Now what” results (always giving ample credit to their business partners) demonstrates how the risk function is creating value in numerous ways and in multiple locations.

A third, optional undertaking is to lead “beyond” to suppliers, customers, and others outside the four walls of the organization. Here, helping key partners up their risk game can have benefits that accrue to all. It deepens relationships and helps illuminate potentially costly gaps in the larger system. A primary risk factor in one part of the value chain may have secondary or tertiary implications elsewhere. This shows how the risk function can serve as essential connective tissue that fosters fluid adaptation across and between silos in the extended enterprise.

Foundational to all of this is leading “down” to ensure that there is a high performing team delivering the best possible information and analysis. Here, the trick is to keep the technical managers and staffers from falling in love with the latest technology. They, too, need to think as leaders, seeing both the bigger picture and long-term vision as well as the day-to-day details. The goal remains to provide useful, actionable information to stakeholders, not to show off bells-and-whistles for their own sake. Keep the focus on providing superior insights.

Together, thinking and acting in the four directions of meta-leadership reframes the risk function from one that identifies threats and obstacles to one that helps solve problems and uncover opportunities. It is a leadership stance that will garner support and encourage ongoing investment. Indeed, the race is on. It will not be won by AI-turbocharged volume or velocity alone. Ultimately, discernment and insight that illuminate will carry the day.

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