Q1) Describe a time when you have had to influence a leader to adjust/change a decision from the path that they were going down and what was the outcome?

A) I was sitting across the table when the CFO of a new mine development stated that they had just signed up I contractor to construct the mine. I mentioned that this should be subjected to project risk management to which the CFO responded, “Ian, you are looking after all the other risk areas of the mine, leave the mine development out. There is a lump sum contract in place and a contingency allowed for”.

Fast forward some 14 months and the problems to deliver the mine were increasing and cost increased exceeded the contingency.  Worse was delays that resulted in lost production and income.  The lesson for me was to insist that project risks are managed through the project life-cycle and show that the costs to do this w]are small to the savings made.

 

Q2) How management interprets the results of risk culture assessments will be biased by their own beliefs, knowledge, attitudes, etc. about operational and strategic risk and its management. How would you deal with this  problem?

A) I might be controversial here. I don’t shed blame on top management for their biases and beliefs that they may have. I think that we risk managers could be doing a much better job of assessing and analysing risks, which can’t be useful for top management if we have a poor model to start with.

I put myself in the driver’s seat to see that the risk process and framework are robust and that the quality of data is insightful and capable of showing top management hidden risks and the most damaging risks and the options to manage.

In all cases I’ve seen that top management take the information and come out with solid decisions and actions.  This provides an indirect way to have top management understand the role and application of risk management and they buy-in.

 

Q3) What is the best way to have risk management drive the creation of value for your company?

A) Companies exist to create wealth and value for shareholders and stakeholders, while others are community based, or government entities that enhance the quality of our lives. Everyone has a common goal to be successful.

The lens of success has been changing over the last five decades.  Initially rules and regulations became the structure for enabling businesses to compete, and compliance was the “elephant” in the room.  Risk management was hardly known at that time and had little if any role in value creation.

By around the early 2000’s, Central Banks had become independent of Government and trade was opened up to market forces.  Risk management had a role to play in value creation.  For example, the insurance industry rose to the occasion more so that in the past and brought informed risk taking and enabled growth, as companies could share the risks.  Risk Management value has grown in value, but not yet seen as the driver of decision making.

Now in the 2020’s, the global marketplace is trending to have more free trade agreements and by implication to open trade up to market forces to higher levels than ever before.  This is the horizon in which Strategic Risk Management together with aligned and integrated risk management can play a pivotal role in driving value creation.

 

Q4) Imagine you have just been hired as the Head of Risk. The Board wants your view about the status of the risk function. Describe your approach and what you would look for?

There are 3 aspects to look for in the first place:  1) has the risk framework changed in the last 2 years, e.g. the risk matrix;  2)  is there are roadmap in place (i.e. a defined pathway that enables a maturity pathway)? And 3) are risk aggregated up to different levels of the organisation structure (allowing bigger pictures of risks to be shown and where hot-spots are)?.

If any of these are lacking, it provides the low hanging fruit of what to inform the board.

 

Q5) Felt pressure to support a decision you disagreed with. How did you approach the challenge?

I generally conduct my own assessment related to any decision that is needed, or to appraise the business case justification that others have prepared.  If the majority select an option that I believe is not the best option, I reserve my decision and let the majority decide the course of action.

But here’s the clincher; I keep tabs with the progress of the business strategy and if it goes off course, use that as ammunition in future decisions that come up for a vote.  It requires tact and diplomacy to show that some executives are the 80: 20 rule, 80 % of their decision are 20 % successful while other executives are 80% successful with 20% of their decisions.

This provides a feedback loop and I can gain the confidence of decision makers to use risk management for what it is designed for.

 

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