Organizations are complex. They have many challenges which translate into risks coming at them daily. Organizations have external challenges which are risks caused by outside people, entities and environments. They have people challenges which are risks involving people who work for the organization. They have process challenges which are risks arising from an organization’s execution of business operations. They have relationship challenges which are risks caused by an organization’s connection with third parties and they have systems challenges which are risks due to data or information assets. ANY ONE OF THESE CHALLENGES ALONE CAN BE COMPLEX, BUT WHEN YOU PUT THEM TOGETHER IN A FAST PACED ENVIRONMENT, IT BECOMES OBVIOUS THAT THERE IS A NEED FOR A MORE GLOBAL SOLUTION THAT CUTS THROUGH THESE CHALLENGES.
Most organizations have the same internal struggles. Although people are typically the most valuable asset of an organization, they are also the source of obstacles. THE UNDERLYING “ROOT CAUSE” OF AN ORGANIZATION’S OBSTACLES IS THAT ORGANIZATIONS ARE MADE UP OF PEOPLE. TO COMPLICATE THE MATTER, PEOPLE ARE PUT INTO “BUSINESS SILOS”.
Although silos are put in place for a reason and have value, they often bring out characteristics that translate into obstacles. Transparency issues, personal agendas, unhealthy competition and internal politics are a few of these obstacles that surface.
The outcomes are “organizational noise” and work settings where people are “talking past each other”. “Organizational Noise” is not having ways for people in the organization to get their ideas out, so they find less effective and productive means of communication that can be disruptive to the organization. “Talking Past Each Other” is usually a product of fast paced environments that are symptoms of aggressive goals, compressed timeframes, increasing workloads, competition and other pressures that contribute to uncertainties. Pushing toward your ideas and agenda becomes more common than collaborative engagement.
The combination of the challenges and the obstacles can be overwhelming but do not have to be. Organizations have the power and the ability to cut through the challenges and make the obstacles less relevant by capturing, organizing and quantifying the risk they face.
Cutting through the Challenges
Cutting through the challenges is all about getting important organizational risk to the forefront. Risk resides in unique places and does not naturally aggregate up. Organizations cannot cut through the challenges without first having a platform to capture and understand what risks exist.
Capturing risks occurs through instituting a process to populate an organizational risk register (a place to house & organize the risk). Instituting a risk register is not complex. It can be easily facilitated by the CFO with the support of the Risk Manager. It involves 4 simple steps, 1) define business process areas and select a risk champion for each area 2) pull the champions together to explain the plan & provide direction 3) send the champions out to facilitate a risk discussion to identify top risk in their business process area 4) have the champions report back on the results to the CFO so that it can be populated in a centralized risk register. This can all happen within a month or so and should be repeated at least annually.
The key to cutting through the challenges is by engaging processes owners across the enterprise to capture the risks. Once in the register, next steps involve narrowing down to top risks, identifying common risks that surface and drilling to root causes so they can be transitioned into actionable plans.
Make the Obstacles Less Relevant
Very few organizations escape personal agendas, politics and transparency issues. In short, obstacles that distract from the mission. Forward thinking companies introduce foundational Enterprise Risk Management (ERM) practices that introduce “Facts” into the equation.
By having a structured process to introduce facts (Risk Assessment Framework), these obstacles become less relevant. Personal agendas are filtered through the eyes of standardized “Rating Processes” that force decisions based on logic. Whether the ideas are well thought out, founded in alternative motives or generated by backroom frustration, they are encouraged to be presented by completing a risk assessment. This assessment forces the presenter to identify the risk, root cause and score the idea by using a rating process that is quantitative, comparative and cuts through biases.