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Transforming Organizations through a Risk Leadership Mindset™

LCG was founded with a singular purpose; to transform how organizations work to the benefit of all stakeholders, but particularly for the primary value-creators in any organization, the employees.

In these tumultuous times, disconnections within both an organization’s hierarchy and with its external stakeholders have elevated the levels of risk and uncertainty to unacceptable and alarming levels. The resultant negative impact on the mission, employee engagement, effectiveness and value is becoming clearer for many organizations, and in many ways reflects the political events of our time. How we lead organizations must evolve, and a Risk Leadership Mindset is a new and effective way of doing so.

What is a Risk Leadership Mindset?

Risk Management is increasingly understood as a key multi-faceted discipline in effective organizations. It is usually practiced as a process that seeks to avoid or mitigate the impact of potential future negative events, even though it is also intended to also address the upside of risk. However, with some notable exceptions and despite positive intentions, it is often implemented inconsistently and not fully embraced as part of the organization’s culture.

A Risk Leadership Mindset goes beyond compliance with the myriad laws and regulations that govern organizations today or even the standard risk management behaviors that many still often struggle to attain. Instead, a Risk Leadership Mindset is one that builds the principles of effective Risk Management into all that we do, particularly decision-making and learning.

It promotes the attributes that allow organizations to take the right risks to improve the business, make the right decisions and continuously learn. As complexity increases and the speed of change accelerates, the level of risk increases, both in quantity and impact. Thus the rate of learning must be faster than the rate of change (Dr. Yury Boshyk) and we should integrate that learning into effective, timely decision-making.

Truly effective Risk Management principles and processes, when executed consistently and combined with an engaged leadership approach, can create a Risk Leadership Mindset; good leadership practices can come from effective risk management, one energizing the other in a virtuous self-sustaining cycle.

So what does a Risk Leadership Mindset look like? The attributes that make up a Risk Leadership Mindset include:

  1. Outside-in Perspective: leaders who intentionally analyze what is happening beyond their own organization (e.g. from customers, vendors, competitors, the industry and the broader environment1) are best able to make the right decisions. As William Goldman wrote,“The future is already here, it’s just not evenly distributed yet.”, the importance of an outside-in perspective.
  2. Inside-Up Perspective: the ability to listen and learn from all levels of an organization is key to effective Risk Management. Doing so will support the effective identification of risk and in creating an agile learning organization that can make the right decisions, at the right speed and for the right reasons.
  3. Multi-dimensional thinking: silo and one-dimensional thinking exacerbates risk. By thinking in terms of connections and relationships across the enterprise, a leader can explore the substance of their organization.  Considering multiple perspectives and competing perspectives in decision-making provides an advantage to leaders and organizations as they juggle competing demands, solve problems and confront dilemmas.
  4. Comfort with Ambiguity and Contradictory Findings: as we gain insight from different sources, we must be more tolerant of the inevitable ambiguity created and new perspectives that may contradict our own; we must view the world in shades of grey, rather than in black and white, and adopt more of a “Fixed v Growth Mindset”2.
  5. Systems Thinking: we must move away from individual, controlling views and toward seeing organizations as complex adaptive systems that enable continuous creation and capture of knowledge. Identifying systems thinkers in your organization, or hiring them from outside, will support comprehensive risk awareness and an ability to leverage learning across the enterprise
  6. Intentional Learning: learning at the individual, team and organizational levels should be bred into an organization because “the rate of learning must be faster than the rate of change” 3. This cycle of learning will generate insight and an understanding of the risks and opportunities you face.
  7. Cultural awareness: understanding organizational culture and inter-cultural difference is an increasingly important component of a leaders risk management toolkit.
  8. Self-Awareness: this is the foundation of any leaders’ development. Insight into areas such as your Learning Style 4, how you identify and control biases (especially under stress), your de-railers, how you make decisions, and your strengths, will allow you to be significantly more effective in combating and exploiting risk.
  9. Ability to Communicate Instrumental and Intrinsic Value: if you are able to help every employee understand their instrumental value and their intrinsic value5 you will more effectively illustrate the importance of people’s work and how it impacts other stakeholders as well as the wider strategy and goals of the organization. Then you can support your colleagues in achieving their goals by uniting people, technology and process in a more efficient and effective human way.

Leaders who develop a Risk Leadership Mindset will be better able to help their organizations understand and work through a wide variety of challenges, dilemmas, problems and opportunities. They will make sense out of issues and problems that are multidimensional and connected. And they will be prepared to do what all great leaders do; help those they lead deal with increasing complexity and risks.

Imagine an organization that is aligned across the enterprise, with a culture that embraces and supports the inherent capacity and desire of people to perform valuable work in service of a wider community of stakeholders: this is what a true Risk Leadership Mindset can create.

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Author : Alasdair PHILIP, Managing Partner at the Loyd Consulting Group BV.

For more on the subject please contact the author.

References:

1 From the work of Reinventing Strategy by Willie J Pietersen, John Wiley & Sons, 2002

2 From the work of Stanford psychologist Carol Dweck, in “Mindset: The New Psychology of Success”, Ballantine Press, 2006

3 Yury Boshyk, ‘ACCELERATING GLOBAL GROWTH, INNOVATION AND LEADER DEVELOPMENT THROUGH BUSINESS DRIVEN ACTION LEARNING: What is it and how is it being used today in global companies?’ in Mike Pedler, ed. (2012). Action Learning in Practice. 4th edition. Aldershot, U.K.: Gower, pp. 81-91

4 Learning Styles Questionnaire: Alan Mumford and Peter Honey, 2000

5 Jay Greenspan, Founder and former chairman, JMJ Associates

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