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Risk competency across all levels crucial to business success
Written on Feb 20, 2019
By Jessica Salerno, OSCPA senior content manager
Risk is lurking in every corner of your business. Savvy companies educate their employees to ensure everyone understands what to look for and how to communicate risk.
“Finance people are going to think about risk from the sense of if there’s a financial risk and what’s the ROI,” said Mike Ross, manager of innovation and development at Insperity. “Different groups think about risks in their own ways. But who has ownership over those risks and how do you create an environment where it’s not just the CFO and CEO thinking about risk, but instilling how to identify and communicate risk in their employees?”
Ross will be at the upcoming Strategic Finance and Accounting Summit speaking on building a risk competency in your business, which, he said, when done correctly can happen in as quickly as six months.
“Within any organization there are competencies that are critical to business success and ancillary activities that need to happen in order to function as a business,” Ross said. “A lot of what we talk about in that session is the difference between what an ancillary function is and what a core competency is and how to build that around risk.”
Ross said different departments in the organization approach risk differently.
“It can be unclear who has responsibility for risk in an enterprise and hard to have a common language,” he said. “It’s hard to then prioritize what risks need to be addressed and to what level.”
Encouraging staff to consider and communicate risk also is an important part of building risk competency.
“It’s critical to empower and allow employees' ability to be strategic in the organization,” he said. “Oftentimes we hear the word strategy and we immediately assign that role to the C-suite, and no one else should deal with matters of strategy, but that’s a critical mistake. Those top-level executives are also the ones that are most removed from the implementation of the strategy.”
Building a common language is another crucial part of communicating risk. Ross said it’s more important that employees understand categorization rather than have agreed-upon words, like “vulnerability,” “exposure” or “liability.” That way, if someone from a separate department is trying to explain to other colleagues the importance of a certain issue, they can classify something as a “level two” and the others will understand where that lands on the scale.
You can’t stop risk from lurking around your business, but you can educate yourself and your staff on how to handle it.
Mike Ross will also speak about the finance professional’s role as a talent catalyst in another session of OSCPA’s Strategic Finance and Accounting Summit. Register now to hear more: