The Fundamental Risk Management Skills that Every Leader Should Possess

In this day and age, risk management is considered by many an essential skill for every leader. Identifying risks, assessing risks and simply facilitating a risk management culture within an organisation are vital. Standards, controls and tools all have an important place, as they show that organisations and their people are focused on risk. With ever-changing regulatory requirements and industry trends, businesses need to be constantly evolving, and that means that, as a leader, you need to be adaptable. It is your responsibility to advise the organisation, and have the plans and controls in place in the event things go wrong. Risk management is a fundamental organisational function, and ultimately an essential leadership skill that needs to be present at all levels of management.

Managing risks, once they are identified and assessed, is about coming up with a strategy to reduce their likelihood or impact. Now, to do this successfully, you need to possess a variety of skills. The question then is, what risk management skills do you need as a leader, to also be an effective risk manager?

An Understanding of Finances

An understanding of finances is more than an understanding of numbers. Of course, it is going to help if you are used to looking at numbers and working with financial tools. However, you also need to have more in-depth financial acumen. You need to be able to translate the related risk to your organisation’s assets, business lines and stakeholders into financial indicators. Not everything in the world of risk management is specific and measurable, but as a risk manager, you need to create something tangible upon which quick and informed decisions can be made.

An Analytical Mind

It may seem obvious that you’ll need to have analytical skills to collect and analyse risk-related data. However, having an analytical mind takes these skills to the next level. You need to be able to assess and predict risk, and that means using the data you gather to make often difficult strategic decisions. What’s more, you need an eye for detail, being able to spot gaps where further research is needed and being able to see the finer points of the day to day risk management as well as the bigger picture.

An Ability to Thrive Under Pressure

Stress is an inevitable part of our working lives, and as a risk manager, you are taking on a huge amount of responsibility, with both lives and company finances at stake. You need to make quick decisions under pressure and keep everyone else calm in the face of adversity. Use stress in the right way, and it can energise and motivate you. However, to do that you need to keep your emotions out of the equation and focus on responding in a rational way when the pressure is on. Ultimately, successful leaders channel stressful situations and manage to thrive while others simply can’t cope.

A Strength for Communication

Communication skills are fundamental to every role in every business. However, communicating is more than just conversing with your peers. To communicate as a risk manager, you need to have technical skills, negotiation skills and the ability to influence people. You need to know how to speak in your industry’s technical jargon yet know how and when to convey complex risk management methods in simple, relatable terms. The soft skills of a good communicator are vital to risk management, and knowing how to convey ideas both one-to-one and in company-wide presentations is key to success.

An Aptitude for Relationship Building

As well as being able to convey ideas and influence decisions, you need to be able to build successful ongoing relationships. As a risk manager, you will liaise across multiple departments as well as with external companies and business stakeholders. You need to connect with fellow risk management professionals, using all the tools at your disposal, ensuring you are at the forefront of initiatives and change. When you do need to implement solutions, building relationships is the only way to get the whole organisation on board. You need to command respect yet remain friendly, use diplomacy and tact yet convey your thoughts clearly, and help others accept change when it needs to happen.

A Capacity for Strategic Thinking

To think strategically, you need to continually consider how risk affects all areas of the business and assess all possibilities. Strategic thinking is about seeing the bigger picture, and being able to look forward and understand potential risks amidst a rapidly changing regulatory environment. You need to have a curious mind, aiming to problem-solve to find answers when potential risks are found. Moreover, your strategic solutions need to align with business objectives at all times.

A Comprehension of Industry and Regulation

Not only do you need to understand the broad business issues, but you need a deep comprehension of the industry in which you operate and the related regulations. This will help you become more adept at communicating with the business and better equipped to identify potential risk. What’s more, to be able to manage risk, you need to invest time to understand political, financial and environmental changes in the business. Change happens frequently, and you need to ensure the business remains compliant at all times.

It might seem challenging for one person to have all of these skills simultaneously. However, it is vital that, as a leader, you at least work to improve upon each of them. By constantly striving to learn and gain experience, you are much more likely to make the right decisions, when it counts the most.

For over a decade, Conserve has helped organisations overcome contractor risk management challenges. We can help you develop a contractor management service that will not only be effective but will make your organisation safer while minimising your overall risk. Request a demo now or visit the Conserve page for more great content.

For more information, contact us at +61 2 8883 1501, enquiries@conserve.com.au or subscribe to our newsletter for regular updates.