Recently, risk managers have caught everyone’s attention because recently, it’s become a more relevant topic in today’s society, and they want to learn more about the risk management business every day, and all the benefits that tag along with it. This also includes learning about the issues that come along with being a risk manager. There are many problems with the risk management business and solutions to these problems.
One of the biggest problems in modern-day risk management is the lack of accountability that seems to have plagued the business and the risk managers within it. Risk managers are those people who work with companies to assess and identify the potential risks that may hinder the reputation, safety, security, and financial prosperity of their organization. They should have a lot of responsibility resting on their shoulders. While these people may have a lot of responsibilities, they aren’t properly assessing them. People who may or may not have the expertise to make the big decisions for companies are making them with no prior experience which in turn could negatively affect their company and the people involved in the future. The aim of this paper is to inform people how we can change this narrative of non-responsibility. Hopefully, once the company realizes this and takes it into account, the risk managers will focus more on getting their qualifications to make big decisions. The risk managers will be qualified to make these decisions when they earn credentials. Consequently, this will affect companies and risk managers more positively instead of negatively.
Risk management is a tough business to get into and an even tougher business to remain in. There are many challenges and problems that are involved in the risk business. One of the biggest problems is a lack of accountability. Accountability is the state of being responsible for something. However, the lack of accountability means not being answerable to a specific duty or task, usually when making a decision. For example, if you make some decisions on your work, you’re liable for your decisions whether no matter what the outcome is. In risk management terms, this means that people are making decisions, but are not being held responsible for them when they are wrong. These failures happen all too often when they don’t have the skillfulness to successfully assess the risk and make an effective decision. This can detrimentally affect the company if one of these people is not good at making decisions and assessing risk.
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A bad decision made from improper risk assessment can ruin the reputation of a company or cost the company significant money. Not having the right credentials to do the job correctly, can turn a situation very bad extremely quickly. If the job doesn’t get done right then the customer won’t be satisfied with their service and the company will lose business. Doing something like this could start a chain reaction that could ultimately doom their company. It is a risk in and of itself to hire unqualified personnel. It is the responsibility of the company to hire the right people, which means putting their expertise to the test. One of the biggest challenges employers face is hiring someone with the ability to identify and assess the risks properly and then making an informed decision based on their assessment. When people incorrectly assess the situation, then the repercussions could be devastating.
Tony Hayward rose through the ranks and became CEO of BP in 2007. When he got to the top of the command chain he always expressed his focus on safety. Unfortunately, one of the company’s oil rigs exploded during his tenure. Extensive investigation proved that the cause of the explosion was ultimately a management failure by not allowing employees to identify, assess, and address the risks like they were supposed to, whether it be because they didn’t have the expertise or the experience to do so. Eleven lives were lost and the company suffered the consequences.
In the end, it cost him and the company time and their reputations were affected by it. He himself wasn’t a risk manager, but it still affected him negatively because the company’s risk managers didn’t assess the situation properly. This event was referenced because it highlights the consequences of bad decisions and how they can affect other people physically and monetarily. It’s also exceedingly important that the ultimate decision-makers are provided with the quantitative risk analysis based on informed assessments. This gives decision-makers the best chance to make the most informed decision for the company.
There are numerous methods for risk managers to improve their decision-making skills. One of the most popular methods is to understand the risk source. If risk managers don’t fully understand where the risks are coming from then they’re unable to make an informed assessment based on those risks. Risk managers must become well-rounded in familiarizing themselves with all types of risks to fully maximize their value to their company and clients. A risk manager should have the ability to make a logical decision based on relevant information.
Another way the decision-making can be improved for organizations to develop their decision-making organizational structure to make sure more qualified people are making the decisions. The training and preparation of these people will be important to any company’s future, if these people do not get trained to properly assess all types of risk then it could possibly affect the company negatively. One of the most effective ways to improve your decision-making is to complete each step in the decision-making process. Some situations require detailed assessments which means that the process must be taken diligently. Taking responsibility for yourself and your actions are so important to the success of the company. When you accept the responsibility, the burden gets put onto you and if you can’t handle it then, it will hurt your company or you more than you can imagine.
