Storytelling for Risk Managers

When I started writing this blog, a few writers and fellow bloggers gave me an ego deflating feedback – “Your posts read like research papers, you should write more stories.” My reaction was – “Write stories! I am a chartered accountant and a risk manager. We are data addicts, not storytellers.” I consoled myself, since I was loathe to move out of my comfort zone and didn’t really know how to write stories. Excuses work best under these situations and I happily created a protective bubble about me. To top it, the research posts were getting very good hits. Things couldn’t be better. I choose to ignore that some other risk management bloggers were doing a fantastic job at writing stories.

My happy delusional state got a reality jolt when I read the book – “Too Big To Fail” authored by Andrew Ross Sorkin. It is a mind-blowing account depicting the events that lead to the financial crises.  The narration of the spectacular fall of the wizards of Wall Street and monumental institutions is awesome. I had to admit, one could write financial stuff as a good story without the technical lingo. Then I decided to delve a little bit deeper into the subject. Naturally, I was curious as how can risk managers use storytelling to influence business teams.

As usual, to get a feel on whether I am on the right track, I relied on my finely ingrained habit of checking relevant data.   I read the McKinsey survey – How social technologies are extending the organization? Just to indulge my penchant for data, the survey states 50% of the organizations are using social networking sites and 41% are using blogs. The icing on the cake is that it increases speed of access to knowledge and experts, while reducing communication costs. The business case is solid, as one can assess from seeing the graph below.

McKinsey Report - How social technologies are extending the organization

So why are risk managers languishing behind? Laws don’t change mindset. A compliance audit just gives bare minimum assurance. Internal blogs, videos and social networking sites are a good medium to tell risk management stories. Interesting stories will capture the imagination of the audience and stay with them. Through storytelling, risk managers can develop a strong risk culture. Hence, here are some situations in which risk managers can use storytelling.

1.     To get buy-in

One of the major constraints for risk managers is to get senior management and business teams support for their projects. Senior management is unable to see the big picture as most of the information presented is about weaknesses detected in earlier reviews and audits. Risk managers rely on data and numbers to build their business case. They don’t narrate the story to project the overall future state or benefit to business. As senior managers don’t get the connections, the idea is lost.

With business teams, the scenario is more difficult. Due to the negative role of risk managers, business teams don’t trust them and are quite wary of involving risk managers. The situation sometimes becomes us versus them political football game.

By using a past event as a base, risk managers can develop a story to give the big picture to senior management and build camaraderie with business teams. Stories help connect with people on an emotional and mental level. Despite all the advantages of relying on data, managers make 60-70% of the decisions on emotions. With storytelling, risk managers can tap positive emotions to get support.

2.     To train staff

The challenge with most corporate training is that within a couple of weeks the participants forget the training and start operating at the same level as before. The formal training for compliance, business ethics etc. is a whole lot about do’s and don’ts. Risk managers use a number of regulations, laws and charts to convey the messages. Humans don’t have long-term memory of such stuff. On the other hand, they remember the stories that connect with them.

Risk managers can use stories to train staff in many ways. For one, in classroom training, they can focus on the story rather than law. For instance, in training staff of US FCPA requirements, build the story around previous bribe cases on how the organization suffered and the impact on employees. Narrate good stories with negative stories to make them understand the scope of the act.

Secondly, to ensure that participants do not forget classroom training, risk managers can use internal blogs, videos and social networking sites to continuously provide information. Think of it, in India Gen Y constitutes majority of the workforce in service sector. Can one realistically expect them to remember the code of conduct and make appropriate ethical decisions based on it? Unless they continuously get stories on blogs that ask them to make choices, they won’t get the experience.  Hence, risk managers can leverage this tool effectively at low cost.

 3.     To share knowledge

 Risk managers face twin problems. Firstly, they have a reputation of doomsayers; hence, business teams are hesitant to involve them. Secondly, sometimes business teams make decisions without understanding the risks. Hence, managers make faulty decisions thinking it is a no/low risk business whereas it might be high-risk business. Prime example is the CDOs in the financial crises. Most of the players in the financial industry didn’t understand the complex nature and couldn’t calculate the risk.

Another aspect to consider is that audit, compliance and fraud investigators can’t share confidential reports with the whole staff to educate them. Sharing such information becomes a double-edged sword.

On the other hand, risk managers can use stories to educate business teams and share information without the risks. For example, clean up a fraud report by changing names and other confidential information to build a story. Put these stories on the internal knowledgebase or share on social networking sites. Business teams would automatically check on them when they have a similar case or situation. Hence, losses from risks will reduce.

 Closing thoughts

One final thought for risk managers, while it is good to use storytelling for business teams don’t do it without having adequate data backing your main points. When I read ‘Too Big To Fail”, by the end of the book one thought entered my mind. What if, Senator Paulson Hanks, the ex-Secretary of the Treasury, orchestrated the financial crises to help his banking colleagues? He made it mandatory for good banks to accept bailout money so that public couldn’t identify vulnerable banks. Isn’t that fooling the public with their own money and covering it with frail logic? . Now I will be able to clear this doubt only when I go through financial statements of each of the financial institutions that got bailout money.Various interpretations can make the best stories go wrong That is the problem with storytelling; hence, maintain a fine balance between data, facts and stories.

References:

How social technologies are extending the organization- McKinsey Quarterly

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3 comments on “Storytelling for Risk Managers

  1. Excellent commentary! As an internal auditor, obtaining “buy-in” from management is a constant challenge. I love data analysis because I love the story it tells. However, unless you can successfully narrate that story, and make it relevant and “real” for your management team, the data is nothing but numbers on a spreadsheet, or dots on a chart.
    The main reason I maintain a personal blog is to hone my storytelling skills, so that I can use them when I have to “write a story” for my audit audience.
    Thanks for sharing and I look forward to reading more of your blog!

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