Corporate Culture and Risk Culture: The Chicken or The Egg?

December 10, 2018

Last week, the IERP held a Chief Risk Officer Networking Group (CRONG), where Mr. Khairul Azwa, director of risk and compliance at a prominent GLIC, spoke on his experiences developing the risk culture in his organization. With a background in banking, he had started as a treasury dealer, eventually going on to become a risk manager at one of the GLICs in Malaysia. One of the challenges that he faced was setting a new risk management department from scratch. A task that he gave himself three to five years to develop. At the company, he noticed two traits that were ingrained in their DNA, firstly they have a strong culture of service and secondly, they cannot afford to make mistakes as that will have repercussions on not only the company, but also on careers, stakeholders and the country.

In developing risk culture at his company, he had to start from the ground up; there was no strong base to begin with. With staff from various backgrounds (i.e. government service, banking, corporates), he had to begin with identifying the staff, top management and the environment of the company. And by that, Mr. KA needed to have a bird’s eye view of the company, as well as build on the core businesses. In order to achieve set goals, the staff in the company needs to be educated on risk management. Each staff member needs to know who will take ownership of the risks and/or projects and how that will be done within acceptable standards of behavior. Mr. KA emphasized that creating a culture is not a an overnight project. It will take years before culture can be part of a company’s DNA.

In the process, there were several challenges he faced. Firstly, the organization needed risk management but no one had any idea how that would look like. Often, there was disagreement in which ideas should be implemented, and how. Besides that, he had a lot of resistance from various levels in creating the risk culture in the company because of the different background, and how to get it done. No one would agree on what they are doing, the reason why they needed to do it.

In spite of the challenges, Mr. KA likened creating risk culture to planting a seed. Where there is no risk management strategy in place, simply start small. Through the risk management process, risk culture can grow organically from staff and interdepartmental cooperation. With risk management in action, an ideal result is that its positive impact will be recognised, creating a chain of positive feedback across the organisation. One successful case can lead the way for further risk management activities, and so on.

Usually, the instinct in facing risk is to avoid or prevent it, but as a risk practitioner, those risks should be seen as opportunities. Mr. KA drew from his experience at his company: before, there was no cohesive team, no solid corporate culture; he recognized these weaknesses and turned them into opportunities. With no firmly embedded corporate culture, there was the opportunity to embed a risk aware corporate culture into the DNA.

Development of good risk management is from focused corporate vision, mission and values. It should be formulated in an environment that is “Risk Aware”. The right culture is needed in order for effective risk management practices, and the role of the risk management department is to set the standards for acceptable conduct. Risk management should not overwhelm the corporate objectives. In the end good risk management is good management.

In Mr. KA’s view, there are several key factors to risk culture:

  1. Risk practitioners always need to interact and intervene at the ground level.
  2. Risk practitioners need to be good listeners and be willing to take action.
  3. Risk practitioners need to facilitate cooperation among staff. Lack of communication and a “silo” mentality is a major impediment to risk awareness and good risk management.

All in all, Mr. KA concluded that risk culture is neither egg nor chicken. Corporate culture is risk culture and vice versa. In order to create a good culture from risk management, risk practitioners need to be a good ambassador. To ensure an enduring legacy, a risk-aware corporate culture is vital so that both leaders and staff do what’s best for the organisation.

Top 10 Skills for Succeeding in Enterprise Risk Management

December 3, 2018

Many have the impression that risk managers just focus on the technical aspects of risk. While the technical is important, it is just one of the aspects in Enterprise Risk Management (ERM). There are many skills needed to succeed in ERM but it is not just about number crunching, ‘challenging’ others, validating internal controls, any form of internal or external auditing, or EHS specialism. ERM is not all about identifying risk either. During our Tea Talk on 16 October, Mr. Ramesh Pillai, IERP® Chairman of the Board of Governors, spoke on the importance of EQ and soft skills in ERM. EQ and soft skills, while often vastly underrated, are what will differentiate the experienced, effective risk managers from the average ones.

These are the top 10 EQ and soft skills a Risk Manager or Risk Practitioner needs in order to succeed in Risk Management: Read more

Creating Value out of Enterprise Risk Management

October 22, 2018

At our Tea Talk session on 12th September, IERP® faculty member Zaffarin Zanal gave a featured talk on Creating Value out of ERM. Zaff started off by stating that—to strong murmurs of agreement across the room of risk practitioners—implementing ERM is hard.  The typical difficulty with implementing ERM is that while risk professionals understand the value for ERM, the top management (as well as the rest of the organization) might not readily see its value. Zaff noted that when something has perceived value, psychologically there is a ‘pull factor’ to it. It doesn’t require much forceful selling (the ‘push  factor’). Read more

Is there Practical Use to the Statement on Risk Management and Internal Control (SORMIC)?

September 24, 2018

In Malaysia, the Statement on Risk Management and Internal Control (SORMIC) is a requirement from the Securities Commission, in accordance with the Malaysian Code of Corporate Governance (MCCG) 2017. On 14th September 2018, a Tea Talk was held at the IERP® International Secretariat, featuring a presentation crafting an effective and practical SORMIC – by Mr. Ramesh Pillai, Group Managing Director of Friday Concepts Risk Consulting. Read more

Global Conference Highlight: Using Enterprise Risk Management as a Strategic Tool

September 7, 2018

A common excuse given by those who are not convinced of the use of risk management is that there is ‘no time’ for it, especially if management often has to make quick decisions. However, Leonard Ariff Abdul Shatar, Group Managing Director of CCM Duopharma Biotech, notes that many mistakes (and the subsequent costs) could have been avoided if additional thought and effort had been put in. As a public-listed company, it’s a requirement for CCM to have a risk management function. For CCM Duopharma Biotech, risk management was split up as it was thought that the audit function was overshadowing it. Read more

Distinguishing Between ERM and ORM Approaches

June 21, 2018

On May 4, over 20 professionals from across industries attended a Tea Talk session at the IERP® International Secretariat. Our keynote speaker for this session was Mr. Ramesh Pillai, Chairman of the Board of Governors of the IERP® and Group Managing Director of Friday Concepts, an ERM, GRC, and BCM boutique consultancy. Speaking on distinguishing between Enterprise Risk Management (ERM) and Operational Risk Management (ORM) approaches, he aimed to dispel common misconceptions of the two related but different approaches.

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