No matter the organization involved or the approach used, risk will never be completely eliminated from business activities. Instead, the goal of risk management is to enable a project to meet business goals in the presence of uncertainty. The communication and reporting of risk is a key part of this process, yet remains an under-developed and often troublesome practice. So what are some of the common challenges to be faced in risk communication?
One influence that prevents risk communication from being completely clear, accurate, and impartial is personal bias. It varies according to person and situation but some of the key factors to shape personal bias include:
Of the many cognitive biases, one example is “anchoring”. This is the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions.
When someone is deciding whether something is a risk or assessing a risk’s severity, they will inevitably draw upon a number of sources. The first source tends to “set the anchor”, and there is often bias towards this anchor when evaluating other information. So, the way risks are communicated can be altered heavily, simply by the first thing the communicator heard.
Another bias to influence risk communication is the human tendency to exaggerate low-risk threats while downplaying high-risk ones.
Finally, over-confidence can also skew risk communication, as some employees will judge they can handle certain risks alone, when they shouldn't, and allocate an overly-low risk score.
The ideal world for a company owner/director might well be one where employees always and exclusively consider company interests when communicating risk. However, in reality, even the behaviour of the most conscientious and loyal employees is likely to be coloured by thoughts such as:
“If this gets communicated how will it make me look?”
“If this risk is pinned on me, how will it affect my career?”
This is not to say that career aspirations and personal drivers are never aligned to organizational ones. But it’s wise to look out for some of the personal motivations that can drive risk communication and consider their influence.
Watch this video to discover an engaging way of presenting risk to senior business leaders or decision makers to ensure engagement.
From major oil spills and various financial crises to certain natural disasters, many would say that a disregard for risk has marred the last decade all too often. In the average enterprise, stakes may not be quite as high, but all too often that same issue of inattention is prevalent.
Planning for the worst or even just discussing things that might go wrong can be perceived as pessimistic or defeatist. What's more, the person to say “yeah, but that will never happen” is actually often proved right.
These are two of the factors that cause many businesses to approach risk only from a sense of obligation – they feel they have to ‘do’ risk. They go through the motions of collecting risk data but lack a firm sense of why they’re doing it or the best way to conduct such activities. The result is that risk communication (if it even happens) rarely affects business and project performance and outcomes. Instead, it remains just a box-ticking exercise.
The best risk communications stem from a solid set of aims and a firm grasp of the event the business is trying to deliver or prevent from going badly.
Risk communication also works best when upper management sees its value and purpose. But a lack of natural interest means this doesn’t always happen, making buy-in from the C-Suite another common challenge.
Spreadsheets are frequently used to communicate and visualize risk. And unfortunately, they’re frequently a killer for engagement too:
How many meetings have you been to where you’ve watched someone typing a series of risks in a spreadsheet whilst 90% of the audience sit and watch them do it? No wonder the risk review meeting is the one people try to drop out of if they can.
Organizations often have a siloed approach to risk communication, with teams individually reporting risks detected across the business. These risks are then frequently consolidated in one final spreadsheet. However, data amalgamation is not a strength of spreadsheets, and the task of consolidating large amounts of risk data is often laborious and prone to error.
What’s more, spreadsheets dictate that risks are presented to stakeholders in a linear and static format, making quickly digesting what’s important and spotting trends difficult and misinterpretations easy. Producing those engaging windows into risk registers should not be delivered in a static and potentially one-use document.
Personal bias is part of human nature so will continue to heavily influence risk communication for years to come. It’s wise to consider how the underlying psychological forces that shape risk communication might be acting upon the messages you receive. And equally, the messages that you send.
Obtaining the necessary buy-in for risk communication is more likely when both staff and upper management are clear why it’s being performed. It’s then that risk starts to actually become real to people and part of their day-to-day job.
When staff begin to see the value of risk communication, the work hasn't stopped, risks should be communicated and collaborated upon by the whole team. It's vital that reports are brought to life, easily interpreted, and attention is held when communicating risk. This is best with visual, non-linear content and somewhat futile with spreadsheets.
SharpCloud creates intrigue and interest around the risk register but allows users to explore how risks are potentially connected, a key element that spreadsheets struggle to provide.
Make risk management a part of strategic decision-making. SharpCloud's platform brings your risk data to life, providing in-depth, practical insights to help you manage your projects.