Plugging the skills gap
How can risk leaders augment and diversify skillsets? The first step is to carefully consider which capabilities will be needed in the future. This depends on the characteristics of the individual company and existing strengths and weaknesses, but technologists, data scientists and individuals with business analytics expertise will almost certainly be required.
In addition, risk leaders need to ensure that their teams possess a diverse array of hard and soft skillsets. This includes communication and collaboration capabilities and the ability to adapt and be agile so that the team can pivot to focus on new priorities as needed.
Being able to speak the language of business is also a must. Individuals who can understand business problems and translate often-complex risk metrics into business insights that are understandable by people outside of the risk function will be in high demand. “Rather than having employees skilled in a particular risk category, it is valuable to have a combined range of experience in different areas of the business and from other industries as well,” confirms Jeanne Cheng of SP Group. “Diversity of risk experience is helpful.”
Risk leaders also need to think through how to recruit these individuals, since many data scientists may not consider the risk function an obvious career destination. One practical way to achieve this is to establish secondments or placements so that data scientists recruited to the wider business are placed within the risk team on a short-term basis. This not only ensures that risk teams get access to the capabilities they need but also helps to establish connections between risk and the wider business.
Sometimes, the risk team may not need all of these capabilities within the function itself. For example, there is no need for risk teams to run supply chain scenario planning if the supply chain team already does so. In this case, the risk team has the opportunity to become a center of excellence, monitoring and overseeing that risk analysis is conducted effectively within the business. In addition, the risk team will need to evaluate potential correlations between risks being monitored by individual functions to ensure that weak signals of emerging threats are not missed.
New business models and technological disruption. Risk cascades created by COVID-19. Inescapably urgent climate change crises. This is a time of rapid change and escalating risks. To succeed, businesses need a fundamentally different approach to risk: moving from risk management to risk strategy that is an integral part of business strategy. Risk leaders will thrive by exploring risk interdependencies. They will invest in AI and data capabilities to develop early warning systems and free their time for higher-order activities. Get this right, and you can transform your risk function from managing downside to becoming an engine of growth and innovation.