Managing risk is a staple of project management, but do you have a risk culture in your organization? Leadership coach Susanne Madsen explains how and why you need to build a risk culture with your team.
Here’s a shot of the whiteboard for your reference!
In Review: How to Build a Risk Culture
There’s risk management, and then there’s building a culture that supports the active management for risks.
Susanne defines risk culture as made up of a three-point cycle: the team’s attitude and behavior towards risk, but also an organization’s culture towards the team’s attitude and behavior. A good risk culture, she notes, means the team is aware of how much risk it can afford to take and acts accordingly.
Susanne explored five steps to building a risk culture:
- Determine risk appetite – what’s acceptable for your project, your team or your organization?
- Implement a risk management process
- Run collaborative risk workshops
- Have open, honest communications on risk
- Recognize and reward the right behavior
Building a risk management culture is important because the more a team is part part of the risk culture, the more they are invested in the project.
Pro-Tip: Remember that there are different kinds of risks in a project or organizational context. While some risks are negative, meaning they will negatively impact the delivery of the project or the organization as a whole, other risks can be positive. That is, there might be unintended impacts, with positive outcomes. When you have a risk culture in place, you’re better prepared to act towards all kinds of risks.
To manage a positive risk culture at your organization, you want to embed risk management into every aspect of your company. What this does is systemically improve the health and productivity of the institution.
Thanks for watching!
Hi, I’m Susanne Madsen. Welcome to this whiteboard session on building a risk culture. When we talk about risk culture, we mean a team’s attitudes towards risk and their behaviors towards risk. You see, our attitude shapes our behaviors that forms our culture.
But the culture also influences our behaviors and our attitude. A good risk culture means that there is alignment between these three. It means that the team is aware of how much risk we want to take, and they act accordingly. But why is this important?
Well, imagine, for instance, that you work for a company like Airbus or Boeing. Their risk culture is quite conservative. They do not like risks because it’s all about safety first. In that instance, of course, it’s important that the team takes appropriate risk.
And it’s also important that it’s not just me as a team leader or project manager, but everybody who have the right behaviors. This helps to promote shared ownership and buy-in from everybody, not just for me as a project manager. But how do you begin to build such a culture?
The first step is to become aware of what the risk appetite is. What’s the risk appetite of the organization? What’s the risk appetite of this particular project? In other words, how much risk can we afford to take? Can we afford for this project to go wrong? If not, then we have a very low risk appetite.
Once you’ve established that, you need to look at implementing the right risk management processes that support your level of risk appetite. So in practical terms, how upfront we’re gonna review our risks, who will be part of reviewing the risks, how are we going to do it, and where are gonna store it, etc.
Then I recommend that you run collaborative risk workshops, because again, this is not just about you as a project manager, how your behaviors are, it’s about the team’s behaviors. And again, when you involve everybody, you get that ownership, and you get that culture throughout the organization. So get into the room with Post-It notes and brainstorm everything that could go wrong.
You also need to enable open and honest communication about risks. In some organizations, it’s not really acceptable to talk about that which could go wrong. You need to change that because, if we can’t talk about risks, well, then they’re not surfacing and then we can’t do anything about them.
And lastly, reward the right behavior. So if you see team members who are acting in the right way, who are really aware of risks and addressing them, then do reward them. In that way, you reinforce the culture that you would like.
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