Political Strategy For Risk Management

A recent report published on Harvard Law School blog stated that in 81.2% of manufacturing and 73.6% of the non-financial sector companies have not appointed Chief Risk Officers (CRO). Interestingly, 83.3% of the financial services organizations have appointed a CRO with direct reporting to the CEO. This indicates, that unless mandatory, the risk managers do not have high visibility. Though their role is important in all sectors, they are unable to leverage themselves among the senior management. This issue is not new, and most complain at not getting a seat at the table.

 1.     Develop Political Skills

We need to look this issue from another lens. We need to develop a political strategy for the risk management department. Reason being, technical expertise on a subject takes one up only to the senior middle-management level. At senior management level organization politics dominates decision-making. Hence, risk managers need to develop political skills and astuteness to survive and thrive at that level.

However, the challenge is that though risk management job requires high political skills, very few work at developing them. According to an organizational study, ~ 65-80% employees avoid politics, ~15-25% indulge in negative politics and ~5-10% participate in positive politics.  Risk managers need to develop skills in positive politics to influence senior management.

The positive politics players have win-win, ethical, organization focus, enlightened self-interest, collaborative and best interests of the business mindset. Indulging in negative politics will be harmful as the group has  win-lose, non-ethical, upward focus, self-interest, competitive and personal gain mind-set. Viewing politics as dirty and avoiding it, isn’t an option. Politics prevails in organization DNA and one has to choose how to play it.

 2.     Implement a Political Strategy

Another aspect to look into is that risk managers have to influence the organization to build a risk culture. The concerns of the junior managers differ from those of middle managers and senior managers. Moreover, different business units have clashing interests and priorities. Stumbling from one person to the other and trying to influence them on a random basis will not benefit the organization or the department. Therefore, to influence each sub-group positively, risk management departments need a political strategy.

After developing the political strategy, risk managers need to implement and run with it consistently over time to reap success. It will involve getting supporters, appointing campaign managers, forming coalitions and doing some secret handshakes. Risk managers of course have to walk a fine line of maintaining independence and objectivity while implementing the political strategy.

 Closing Thoughts

Success in organizations depends on how well a person manages their own expectations by understanding the political game. Corporate world is a jungle. One cannot expect that people will make rational and logical decisions in the best interest of the organization. Risk managers will remain on the side lines unless they learn to trapeze the political web. The good news is one can learn political skills.

References:

  1. Risks in the Boardroom – Harvard Law School
  2. Investigations in Organizational Politics
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