Risk Appetite in Communications: Catalyst for Innovation and Growth

All organisations need to manage risk. Some do it better than others. Some make basic mistakes; others try to drive out all aspects of risk. But the reality is that some risk needs to be maintained, not least in communications, otherwise innovation can die.

We have all seen examples across communications where risk does not appear to have been managed. In everything from political engagement though to Christmas adverts; it can be suggested that the risk was not managed. The danger is that this absolute focus on risk minimisation leads to a perception that a level of risk should be zero or as close to it as possible. That risk should be eradicated.

But this approach fails to appreciate the benefits of risk taking – how it can make an organisation stand out from others, especially its competitors, and how those benefits can be then used to make sure improvements and drive greater innovation.

Rather than a misplaced belief in the need to eradicate risk—which frankly is not entirely possible anyway—the focus should be on how much risk appetite there is and a discussion about its benefits, not just its dangers.

The term ‘risk appetite’ recognises how an organisation, not just a corporation, views and manages risks. Rather than treating risks as enemies that must be eliminated at all costs for the fear of financial or reputational damage that may be inflicted, it suggests that risks need to be explored and understood. Once explored and understood they may be considered as integral components of growth and development. Risk is needed to help keep communications relevant and dynamic.

Boundaries sometimes need to be pushed so that an organisation does not end up in a comfort zone. The risk may allow new channels of communication to be used, new audiences engaged with, new messages used and just better, more creative ideas used to challenge the status quo. This mindset is crucial in an era where communication landscapes are constantly evolving, demanding adaptability and creativity.

Risk and innovation are companies often lauded in the corporate world, and risk-takers are championed by the media. This approach recognises how ground-breaking ideas are stimulated but in communications the potential reputational damage but mean that risk is viewed too negatively.

Instead of seeing the potential of engaging in what might end up being controversial discussions or how a team can become more agile when having to react in such circumstances, communications teams are seen as the way to diffuse the heat from a problem.

We all know that teams grow and develop when placed under some amount of pressure and have to deal with difficult or challenging situations. A zero-risk type of approach would not appear to be very professionally challenging either. This means organisations recognising that part of the calculation of risk appetite involves viewing failures as a learning opportunity for the other of the organisation. Setbacks and failures offers valuable insights that can inform future strategies, contribute to overall growth, strengthen abilities and can make an organisation an interesting place to work.

It has been suggested that recent political fallout against organisations,and the backlash against ESG could mean that many prefer not to engage and will not act as champions.

Of course, all organisations need to adopt balanced approach on risk and some will be more important to address than others. But, it has to be recognised, potential benefits as well as downsides and they need to be considered. 

An organisation that has thought about its risk appetite is, I believe, more likely to be innovative in its communication strategies, be aware of the changing landscape, more strategic in its approach to risk-taking, and prepared to learn from failure rather than looking to attribute blame.

Overall

The need to maintain an appetite for risk still requires judgement and should always be based on knowledge. It is not a call to go blindly into the future without preparations or plans.

The benefits of embracing some risk rather than simply trying to eliminate can be useful. It can require courage and also needs people to champion it. Communications has a critical role to play internally and externally.