How can you build a culture of proactive and transparent risk management?

In my perspective, determining your risk appetite is a personal and subjective process. It depends on factors such as your financial goals, investment timeline, and your comfort with risk. You might consider factors like how much you're willing to lose, your investment horizon, and your overall financial situation when assessing your risk appetite. It's also a good idea to consult with a financial advisor to help you determine a risk level that aligns with your objectives.

To build a culture of proactive and transparent risk management, Implement a risk management cycle that follows best practices and standards, such as the Project Management Institute (PMI) or the International Organization for Standardization (ISO). 1) Use appropriate tools and techniques, such as risk matrices, risk maps, risk response strategies, and risk audits. 2) Encourage risk awareness and ownership among all stakeholders. 3) Please communicate regularly and quickly about risks, their likelihood and impact, and the actions to mitigate them. 4) Foster a culture of continuous improvement by learning from past risks and successes. In addition to risk management, transparency, and proactive communication can also be fostered.

To build a proactive and transparent risk management culture: 1. Leadership Commitment 2. Clear Communication 3. Effective Processes 4. Technology and Tools 5. Continuous Monitoring 6. Employee Involvement 7. Stakeholder Engagement 8. Legal and Ethical Compliance 9. Review and Improvement

Make risk management a part of daily decision making: Risk management should not be considered as an isolated activity. Instead, it should be integrated into everyday processes, decision-making, and strategy setting.

Building a culture of proactive and transparent risk management requires a combination of leadership commitment, communication, and integrated processes. Here are some key steps you can take to foster such a culture: 1. Leadership Commitment 2. Clear Communication 3. Define Risk Tolerance 4. Integrated Processes 5. Use Technology 6. Reward Proactive Management 7. Regular Review 8. Encourage Reporting 9. Scenario Planning 10. External Benchmarking Building a proactive and transparent risk management culture is an ongoing process that requires consistent effort and commitment from leadership and employees at all levels.

Provide risk management education: Invest in regular training sessions to enhance the risk literacy within the organisation. Make sure that risk management education includes practical examples relevant to the business.

It all starts with feedback. It's important to implement mechanisms for employees to provide feedback on risk management processes. This fosters a culture of continuous improvement, transparency and mitigation of risk.

One thing that I found helpful is keeping a catalog of risks along with the details of the impact of the risk and the likelihood of the risk materializing. Risk management is a continuous learning process and we need to learn from the risks that got materialized.

In every project it is important to navigate not only to an end objective but identify when the end objective or the path to success has changed. Risk and risk management is not only about both project and business risks that could impact the project outcomes. Risk registers and project assumptions provide key navigation points to monitor the project risks. Involving compliance and risk or legal teams in your steering committee allows insight as to whether a business risk that arises will impact the project.

Encourage open communication: Foster a culture where employees can openly discuss risks and are not afraid of making mistakes. Mistakes can be a valuable source of learning and should not lead to penalties.

Risks can be categorized as either internal or external factors. External risks stem from sources like political, governmental, economic, climate, or natural changes. While many of these factors are beyond your control, some can be anticipated through monitoring news and gathering information. On the other hand, internal risks originate within your organization. It's crucial to establish a systematic approach for identifying risks in your day-to-day project management and reporting. Risks can emerge from even minor project delays or small issues. Having a process in place to flag and address them as they arise is vital in preventing these minor issues from escalating into significant risks.

Focus on the decision quality: Instead of focusing on risk identification, focus on the quality of decisions. As the main purpose of risk management is to help make quality decisions under uncertainty, this should be the primary focus.

Make use of risk management tools: Use modern risk management tools, such as risk modelling, to quantify risks and understand their impact on the organisation's objectives.

At the brink of an AI-driven tech revolution, enhancing risk management tools is pivotal. Yet, our role in supplying relevant data for our models stands out. Effective risk communication and sustained collaboration among stakeholders are crucial. In this evolving landscape, the synergy between tech and human interaction is transformative. Models' efficacy hinges on the data they receive, underscoring the need for transparent communication. The fusion of human expertise and AI will shape advanced risk management.

There are essentially 2 kind of Risks- known and Unknown And I’ve always believed that an unknown in your previous project is a known risk in the next project. Your ability to predict risks grows as you lead more and more projects as a PM. Document each and every risk you've faced and keep adding risks to your personalised Risk Register. If you start a new project, refer to this document as it will help you identify risks more effectively. See what risks the PMs in your circle have encountered in their projects and update the document accordingly. One thing is for sure, project management isn’t done in Silos

Organization needs to support positive risk culture by training employees and stakeholders that risks are both positive (opportunity) and negative (risk). Opportunity should be enhanced or exploited and risks should be avoided, mitigated or transferred. Project manager should collaborate with project team members and project sponsors to create and update risk register together at frequent intervals to ensure all risks are identified and have appropriate risk owner and risk response plan.

First of all, before even getting to proactivity, one needs to ensure the people playing a role in the process are trustworty. When values are positive there are the basis for further strengthening of risk management as there would be individual commitment to protect the company. Said that, another important point is having trained staff with a deep knowledge of the process, of the business, of the opportunities but also of the connected potential risks - in any business environment. Helping people understanding the whole chain, not just part of it (the one they are involved in directly) is essential to enable automatic links which will inevitably enhance a risk based approach. Educate people to leverage opportunity and risk efficiently 💡

Be proactive and lead by example, when people see you being proactive about risk then they’re more likely to do the same. Whereas, if you don’t make a point about leading by example, then you can’t expect anyone else to be proactive.