A new report from Cutter Consortium describes what Harvey Parr, a retired director with British Telecommunications, calls, “perhaps the ultimate case study on how an organization became a world-class manager of risk”.
Profiting From Risk: A Transformation of One Company’s Risk Culture, describes the 15-year journey communications and aviation electronics firm Rockwell Collins took to create a world-class risk-taking organization.
The report, written by Cutter Consortium Fellow Dr. Robert Charette and Rockwell Collins managers Dr. Pat O’Brien and Art Gemmer, describes what it took to change Collins’ culture, and provides insights and lessons to others that are trying to transform their organizations into one that is more innovative and risk-taking.
According to Charette, some valuable lessons include:
– Recognize that Risk is Strategic: Explicitly incorporate enterprise risks to achieve best fit for your business model, with regard to market opportunity, competitive threats and weaknesses, as well as its financial plans.
– It’s All About Making Better Decisions: There is no value in risk analysis itself — value is derived from decisive execution of logical action plans based in part on that analysis.
– Don’t Confuse Motion With Progress: Culture change must be organized around a few core processes that provide revenue, growth and increased capability to serve real customers.
– Instill Principle-Based, Process-Focused, Behavior-Driven Risk Management: Risk management is not yet another corporate process, but a different way of thinking and acting. Unless an organization thinks about what behaviors it wants its employees to take in the face of risk, a proactive risk management culture is never going to take hold.
– Plan, Do, Check. But Most Important — Act: You cannot succeed without acting. Many plan for cultural change but few actually give it a real hope for success.
An executive summary of the report is available at www.cutter.com/risk/authors.html