By Chrisann Naicker and Nicole Catterall, Professional Indemnity Underwriters at SHA Risk Specialists
The number and complexity of risks that pose a threat to the operational efficiency of South African companies are rapidly increasing. While risk management was previously seen as the responsibility of dedicated specialists, a broader level of exposure means that it now needs to become a practice that is instilled at every level of a company’s culture, rather than a siloed responsibility.
Today, corporates are required to navigate a minefield of emerging risks, including system risks posed by cybercrime, external risks such as business interruption and adverse macroeconomic pressures. Internally, enterprise risk management teams are faced with the task of mitigating internal risk such as the loss of personnel and an imminent skills drain.
Furthermore, financial turbulence, legal liabilities, technology issues, strategic management errors and accidents are direct products of the prevailing climate of uncertainty. Risk management practitioners therefore need to cast the net wide and find ways to identify and control threats to a company’s financial wellbeing, its operations and its commercial objectives.
Risk awareness as a cornerstone of company culture
Effective risk management in the long-term however, needs to be embedded in company culture and become the collective responsibility of all stakeholders.
The strength of an organisation’s risk-aware culture can be measured by the intangible effects of employee values, cultural influences, beliefs, socialisation, knowledge and behaviour. A robust risk-aware culture is therefore one in which every employee, at every level, understands and appreciates that they are part of a ‘bigger picture’, and that the ability to thrive in the face of impending risks rests with them as individuals.
The role of training and development
Training and development are crucial to fostering a risk-aware company culture. As a first port of call, leadership teams need to assess their employees’ level of risk awareness. Surveys, one-on-one sessions and open forum discussions are an effective way of gaining a comprehensive understanding of how employees perceive risk and reveal knowledge and skills gaps that exist within the business
Training should then address these areas of need in a direct way, providing opportunities to upskill employees on best practice for their particular industry.
In the Professions environment for example, this kind of training could include workshops, information sharing sessions, process implementation and continuous professional development in line with global and local industry developments. Here, incentivisation can provide a means by which to encourage active participation and promote higher levels of job satisfaction.
Ultimately, every stakeholder needs to understand that as the ‘eyes and ears’ of the company on the ground, their behaviour and decisions expose or protect their company from multiple levels of risk. Gaining the collective buy-in is a crucial step in engendering a personal sense of responsibility within each individual in the organisation.
Open conversation and better governance
In addition, training exercises need to be supported by clearly outlined processes and a chain of supervision that holds individuals accountable and promotes a culture that encourages open conversations. Focus groups are particularly effective in this regard. People should be allowed to come together within an environment of transparency, to share their experiences, ideas, thought processes and the daily challenges they face within their respective roles.
Encouraging open discussion should be an exercise in challenging the status quo and taking a collective approach to formulating risk solutions that are underpinned by actual experience rather than assumptions.
Finally, risk management ‘mock up’ sessions need to be performed where companies run practice scenarios based on the most pressing risks they face in order to assess employees’ level of readiness to react and respond accordingly.
More ‘aware’ employees make for more proactive workforces and ultimately, companies that are better equipped to adapt and thrive in an evolving and expanding risk landscape.
Risk awareness culture in SA businesses
In SHA’s recent risk survey, we found 62% of businesses acknowledge that they kept a risk register - the concern was that 47% were not willing to share this information with insurers. We believe that this information would assist in better understanding a company’s risk awareness culture and in turn this would assist Insurers in their risk review and pricing of insurance programs.
