In this opinion piece, Jeff Yeo, experienced risk practitioner with a global financial institution explains why being in the co-driver seat for digital transformation can be just as important a role for risk managers.
It is certainly not getting easier these days being a risk manager. The expectations and demands are getting higher and more complex.
Welcome to the age of digital revolution where disruptive technologies like robotics, Artificial Intelligence (AI), Virtual Reality (VR), Internet of Things (IoT) are shaping the way we live and the landscape of the business environment.
Are templates, risk registers, heat maps, impact and likelihood tables adequate tools to take an organisation through in navigating the new risk landscapes. Most importantly, how transformed will the roles of risk managers be in organisations that are embarking on a digital transformation journey?
Digital transformation to put it simply, is how digital technology is integrated into all areas of business processes thereby changing the current and known ways in operating and delivering values to both external and internal customers of an organisation. In a simple sense, it is about using digital technology to solve issues that have been solved using traditional methods.
Many organisations’ have already embarked on this journey. For example, “going paperless” through e-forms applications, e-procurement systems, e-approvals, etc. In the financial industry which is the forefront of heavy reliance of technology and infrastructure, mobile and digital banking initiatives have undoubtedly created a paradigm shift from the traditional way of the banking business. Consumers now have more options and choices instead of going to traditional financial institutions.
Meanwhile, in the medical and healthcare industry, patients’ medical records and real-time surgical procedures have also seen a major transformation in the ways patients are being diagnosed and the medium in which patients’ services are being delivered.
What makes digital transformation successful?
In a study launched recently by Singapore Management University, in collaboration with Tata Communications, DBS Bank and KPMG, it was revealed that culture of an organisation determines the success of an organisation in the digital transformation journey.
https://www.smu.edu.sg/news/2018/11/20/new-study-culture-determines-digital-transformation-success
In short, the ingredients are: (i) leadership of the organisation in leading and setting the tone for transformation (ii) organisations’ culture in being receptive to change (iii) getting the necessary buy-ins from the management and key stakeholders in the organisation (iv) presence of small, agile, nimble- teams that are highly empowered to drive digital transformation as opposed to making large-scale enterprise-wide changes that could be intimidating for employee.
Not surprisingly, like the implementation of an ERM initiative, the tone from the top plays a key role in the leap from the traditional modus operandi of a business entity into the digital way. In these aspects, risk managers will have to be plug into the strategic planning processes and business decisions within the top team. It is only through this, that the value-adding components through horizon scanning of potentials risks, their mitigating measures can be shared, real-time, with key decision makers. The value add of a risk manager does not restrict to only the realm of risks and threats identifications. Introducing and highlighting opportunities are the other aspect that a good risk manager can be of great help to the senior management team.
A good digital transformation strategy looks at both opportunities and threats. This is in the same spirit of transforming an organisation into a risk intelligent one.
The role of a risk manager here serves to remind the top leadership that for any transformation journey, having a culture that is receptive to change makes or break any transformation initiatives. Any strategic moves and direction by the senior management must first consider existing deep-seated culture within an organization.
Executing in phases and within comfortable deadlines is certainly a good strategy than a big bang approach.
A risk manager having worked with key stakeholders in the initial risk management initiatives would certainly have a good grasp of the kind of cultural set-up of the organization. While the steering of the overall transformation strategy comes from the top, risk manager can play an advisory role and that of an influencer in charting the strategy.
Buy-ins from senior management and key stakeholders is vital. Helping the senior management in getting buy-ins is and should be considered as one of the forte of a good risk manager.
First and foremost, the fundamental question is why are we doing this? Questions like what is in it for me and how the transformation will benefit my current processes and optimise my operations should be on the top of every risk manager’s mind if he or she happens to be in an organization that is about to embark or is already in the digital transformation phase.
Steering an organization’s digital transformation strategy is not the role of a risk manager alone to begin with. Risk Managers are relationships managers at the enterprise level.
Risk manager can value-add through its established working relationships with key stakeholders in collaborating in identifying the risks involved, mitigating measures and opportunities that could arise in the journey of transformation.
What the study revealed about the presence of small, agile, nimble teams to drive digital transformation certainly excites me. Having read this far, I am sure you know by now risk manager plays a pivotal in the transformation journey. A team that is small and agile comprising of members who are familiar and senior enough to understand the key processes of the business entity would be able to bring in the essence of each domain knowledge and expertise for the overall business.
A digital transformation journey is akin to undertaking a major project. A risk-based project management journey. In delivering the desired results of a good transformation strategy, these are the key factors that need to be in place and thoroughly discuss.
- Objectives and scope of the transformation
- Costs to be budgeted for the transformation
- Resources needed (includes manpower and infrastructure)
- Schedule and timeline to implement and complete
A risk manager who is part of the team in driving the transformation should instinctively have the risk awareness to prioritize risks so that threats which will probably occur first and those that pose the greatest potential impact to the project must be tackled first. Developing and implementing mitigation strategies with fellow team members to reduce the impact of the risks and in the prevention of any identified risks from being realized, will be the next step forward.
While the driver seat for a digital transformation may not be reserved for risk managers. The co-driver seat for a risk manager may not be a bad idea after all.
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