A post in a newsfeed this week caught not only my attention but also my ire. The statement was “Consultants are the gatekeepers of risk knowledge.” The author then redeemed herself by saying that
“risk management is not a tool, but a way of thinking.”
This, I agree with, but it is much more. Risk management is also a function and a capability.
The thinking on this topic led me down two paths –
- Get clear on which consultants are the gatekeepers
- Why so much resistance to developing risk management capabilities
I’ll address each one separately.
There are basically five (count’em 5) types of consultants in risk management and beyond.
- The high-end expert is a former C-suite Executive, Dean of a respected university or Partner in a global consulting firm (ie: McKinsey, Bain, BCG) – it has been years since they have implemented anything – they are great at relationships, public speaking and seeing the big picture. They hypothesize and write clever books that are listed as ‘must reads’ in the NY Times or HBR book reviews. I have much respect for these leaders – I even read their books – but they don’t possess the practical knowledge on risk management that creates value.
- The expert practitioner has built a practice based on experience with risk management. The solo consultant/practitioner brings much practical experience to the problem at hand. They operate based on what they know from experience. They grow from continually engaging in ‘projects’ that must be rescued – this is not risk management – though they are adept in identifying the risks over which a company has zero control or those that are insurable. Neither of these approaches is helpful in creating value for a company – it just gets the job done – and sometimes that is all that is needed.
- The expert practitioner who has built a business on their knowledge, experience, relationships, and education. This is a boutique firm, (usually less than 25 people) that has incorporated risk management into a unique value proposition for its clients. This is where my company fits in. The experience with risk management is diverse – it is the strategic and operational elements that create value. Leaders of boutique firms work with every size of business, but they usually pick their sectors carefully. They are often involved with education and social enterprises where they share their IP – they have spent many hours and days thinking about and creating innovative solutions based on leading practices and applications. The IP is not borrowed or evolved from an existing model – it is original, tried, and true.
- The generalist consultants offer services from soup to nuts without a defined specialization. These consultants will have some proprietary IP that has been ‘evolved’ from existing practices, but with their spin on it to create the value a client needs and may not necessarily be proven or measurable.
- The IBMs of Consulting – the behemoths in the global consulting space. We all know who they are. They have been evolving from consulting to becoming the (expensive) supplemental workforce for special projects. These firms provide services that range from Strategy to Project Management, to workforce augmentation in every sector imaginable. The smaller firms will at times be solicited to join their projects to shore up the knowledge and experience gaps. Here are the gatekeepers of knowledge and IP. It can often be outdated in practice, but it protects the status quo. These firms will not rock the boat or transform the culture. They will get the big jobs done!
Now that we’ve explored the types of consultants and/or advisors in risk management, why then do so many companies resist adopting the changes that will impact how they make decisions, how they are held accountable, how they plan, how they execute, how they recruit and how they measure results? . . . . simply . . . each one of these is the WHY!!
Because they will have to change their patterns of established behaviours.
Being a ‘Risk Intelligent’ organization (to borrow the phrase from Deloitte) means doing things differently, to get different results. It’s not always about the financial results – it can be about the customer experience, the effectiveness of people, processes and systems, and/or it can be about having a strategy that the business actually has the capabilities to execute.
We are seeing change and transformations and I must ask myself if we are actually changing anything ‘human’ or just technology – my guess is, it is the latter; hence the pervasive fear in many organizations.
Businesses went through something similar in the 80s when so many people were being replaced by technology – we called it ‘automation’. If that is what is happening now, we have not made much progress.
Here is the greatest risk in transformation – that we don’t achieve the cultural transformation, but instead just have more sophisticated toys.
One of the most transformative aspects of a robust risk management process is the tangible and intangible value that is created – and that can be measured.
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