Cultivating a robust risk culture is pivotal for program teams to not only survive but thrive in today’s business environment. Risk awareness is a shared belief that extends beyond processes and policies—it’s embedded in the mindset and behaviours of every team member. Here I hope to stretch your understanding of risk culture and provide insights from eminent thinkers and authors who have shaped the narrative of risk awareness in program management.
Series
You will find this post is one of several in the series I have focused on Risk: Check out the other posts here.
Building a Strong Risk Culture: The Bedrock of Program Success
The journey toward establishing a robust risk culture within a program team is more than adopting a set of policies—it’s a paradigm shift toward cultivating a collective consciousness that prioritizes the anticipation, communication, and management of risk at every turn. In this expanded exploration, we delve into the nuanced facets of what constitutes a strong risk culture and how it can be fostered within your program team.
Understanding Risk Culture
A strong risk culture is an environment where program team members are not just aware of the risks but are also empowered to respond proactively. It’s a culture that doesn’t just tolerate risk but understands it as an inherent aspect of all project activities. This understanding begins with leadership but must permeate through all levels of the organization to be effective.
The Dimensions of Risk Culture
Creating a risk-aware program team involves several dimensions:
- Risk Perception: How team members view risk, influenced by individual experiences and organizational narratives around past risks.
- Risk Attitude: The predisposition to approach or avoid risks, which can shape the team’s willingness to engage with potential issues.
- Risk Appetite: The amount and type of risk the program is willing to pursue or retain, often guided by strategic objectives and market conditions.
- Risk Behavior: The actions taken by individuals and the team in response to perceived risks, including how decisions are made and actions are taken.
Cultivating Risk Perception and Attitude
Risk perception and attitude are foundational to building a risk culture. They can be cultivated through:
- Training and Education: Regular, structured learning opportunities to enhance understanding of risk concepts.
- Narrative Building: Sharing stories of past risk events and their outcomes to shape perceptions and attitudes.
- Leadership Modeling: Leaders demonstrate a balanced risk approach, influencing the team’s attitudes toward risk.
Establishing Risk Appetite and Behavior
Risk appetite and behavior are about setting boundaries and norms:
- Clear Communication: Articulate the acceptable levels of risk and the rationale behind these thresholds.
- Policy and Procedure: Develop and implement policies that guide risk-taking and risk-averse behaviors.
- Reward Systems: Implement incentive structures that recognize and reward appropriate risk behavior.
The Role of Continuous Improvement in Risk Culture
A strong risk culture is not static; it evolves. Continuous improvement is driven by:
- Feedback Loops: Systems to gather and act on feedback regarding risk decisions and outcomes.
- Regular Assessments: Periodic evaluations of risk culture effectiveness and adaptations as necessary.
- Learning from Outcomes: Whether positive or negative, outcomes are a source of learning and cultural reinforcement.
Infusing Risk Culture into Project Life Cycles
A risk-aware culture is most effective when it is seamlessly integrated into the project life cycle:
- Initiation: Risk culture is considered when defining project scope and objectives.
- Planning: Risk assessments are incorporated into planning processes and documentation.
- Execution: Active risk management is a day-to-day activity, with risks being tracked and mitigated as they arise.
- Closure: Lessons learned from risk management activities inform future projects and contribute to the organization’s knowledge base.
By expanding on these critical elements, we can begin to see the contours of a risk culture that is not just functional but exemplary. A strong risk culture is characterized by a shared understanding that risk is not an external element to be occasionally addressed, but an integral part of the project management landscape. It’s in the DNA of every decision, action, and strategy, ensuring that risk awareness is not just a concept but a lived practice that drives program success.
Insight from Thought Leaders
Dr. David Hillson, also known as the ‘Risk Doctor’, emphasizes the psychological aspect of risk management. In his book “Understanding and Managing Risk Attitude”, he explores how risk attitudes influence behaviors and decision-making processes within teams. Hillson’s approach isn’t just about identifying risks—it’s about understanding the human factors that affect how risks are perceived and handled.
Dr. Robert C. Chapman‘s work on risk management focuses on practicality. His book “Simple Tools and Techniques for Enterprise Risk Management” is a testament to this, providing actionable strategies for building risk-awareness within the team. Chapman advocates for a straightforward, no-nonsense approach to fostering a culture that is both risk-aware and resilient.
Norman Marks is another influential voice, challenging conventional notions of risk management in his work “World-Class Risk Management”. Marks argues that a strong risk culture is one where risks are not just managed but are embraced as potential opportunities for growth and innovation.
Great vs. Good: The Differentiators
What separates a great risk-aware culture from a good one is the level of engagement and integration. Good programs manage risks when they arise; great ones anticipate risks and embed this anticipation into every aspect of their operations. This means not only having the tools in place but also ensuring that every team member, from the C-suite to the project intern, is equipped to think proactively about risks.
Naming the Sources
- “The Risk Management Handbook: A Practical Guide to Managing the Multiple Dimensions of Risk” by David Hillson: Offers a multi-dimensional view on risk management, emphasizing the need to understand the various types of risks.
- “Simple Tools and Techniques for Enterprise Risk Management” by Robert C. Chapman: Focuses on the practical aspects of risk management, advocating for tools that are accessible to all team members.
- “World-Class Risk Management” by Norman Marks: Provides insights into how risk management can transform into a strategic tool for finding opportunities.
Fostering Risk-Awareness: A Continuous Process
Building a risk-aware culture is not a one-off project; it’s a continuous journey. It requires dedication to learning and professional development. Engaging in coursework, attending workshops led by these thought leaders, and seeking one-on-one coaching are all steps in the right direction.
Key Takeaways: Enabling Transformation Through Risk Awareness
The distinction between a good and a great risk-aware culture lies in the ability to transform risks into strategic opportunities. By drawing from the wealth of knowledge provided by the aforementioned authors and integrating their principles into your program’s DNA, you can elevate your team’s risk management from good to great. As you embark on this transformative journey, remember that fostering risk-awareness is about nurturing a mindset that permeates every aspect of your program team’s work
