RISK MANAGEMENT
ASSESSING RISK AND THE ROLE OF TRUST:
Managing in a world of global uncertainty
Business today operates in a highly uncertain world. The information needed to service the deployment of personnel effectively to meet business objectives is not always complete. So the risks associated with global mobility are high but must be addressed to achieve organisational success. Trust can play an important role in risk management. Dr Sue Shortland explains.
H
R leaders need awareness of global risk and to demonstrate actions to manage in an environment where organisations increasingly have little control. Risk can be found internally
within organisations, affected by leadership priorities and actions. Risk not only operates at firm level but also within the industry group in which the firm is located and in the global sphere where all businesses function. While organisations have some degree of control over risk at the leadership and firm level, and perhaps can have some influence at industry or sector level (if they are a major player for example), they experience inability to control risks determined globally. As such, organisational effort is often focused on leadership of the firm, while only keeping a watchful eye on global risk context. It is human nature to ignore risks that we cannot control. But geo-political global events pose a high level of risk to businesses today and as such we need to identify risk factors more effectively. This is particularly important for global mobility professionals who have responsibility for the deployment and well- being of staff working across the globe, increasingly in emerging economies where firms lack the infrastructure to support - and the experience of managing - expatriate and local workforces. Changing behaviours in terms of identifying and mitigating risk
is not straightforward. As Artumo Bris, Professor of Finance at the IMD World Competitiveness Center speaking at the CIPD’s annual
conference highlighted, while people are generally risk-averse, human biases can make us over-confident. Over-confidence is a fatal leadership flaw – ignoring the possibility of extreme events is a perilous course of inaction as extreme events do happen and these can eliminate businesses. It is therefore important to assess global risks and enact protective measures. While fostering a culture of wider global risk awareness and balancing the imperatives of ethics and compliance, a customer-centric focus remains crucial. Drawing upon values and ethics can help to shape and drive forward decision- making, taking into account levels of risk ranging from local to global. With risk awareness as the backdrop and using influence as a tactic to bring about change, principles-based leadership should be able to address both good and bad times, balancing risk with value creation.
Managing risk To assess risk effectively and manage it successfully, it is important to promote thinking about the outside world and model scenarios, train people on these models and provide good quality information and intelligence so that appropriate decision-making is possible. Asking people to make a significant change to their behaviour may not deliver the desired response. Encouraging and influencing behavioural change, for instance via small ‘nudges’, can be more
22 | Relocate | January 2019
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