We’ve all heard the adage “The whole is greater than the sum of the parts.” It’s a motto that I believe risk functions should take to heart.
Technologies are helping companies to move more quickly and to become highly connected, which makes it more critical than ever before that risk functions collaborate with each other. That’s why risk function collaboration is the focus of PwC’s 2020 Global Risk Study.
When risk functions operate in silos, it’s hard for them to have full visibility into risks and their interdependencies. Conversely, if risk functions are able to rely on one another, stakeholders receive risk insight across the enterprise—as opposed to a single line of sight from each risk function.
Consider this example shared by one executive we interviewed for the risk study. Monitoring of this organization’s customer service processes used to be more straightforward: Are service call times under the time threshold? Are call volumes trending up or down? But, now the customer experience is derived from a mix of interconnected digital and human touches. By not capturing the right metrics and not understanding the interconnections between upstream changes to the customer experience and downstream risks to their customer front lines, this organization did not adjust risk indicators and missed a signal of growing customer frustration until the issue became a significant brand risk. In response, risk functions and business leaders came together and—through an aggressive program—rebuilt systems, processes and controls for an end-to-end customer view that is receiving highly positive customer response.
But if it is hard to collaborate efficiently, or if risk functions aren’t confident in each other’s work, collaboration won’t happen. That’s why optimizing each function—risk management, compliance, internal audit and other risk-related groups—is a critical step in building more collaborative risk management. Optimizing the functions will create efficiency for each group and build confidence across teams. This will, in turn, maximize risk coverage, eliminate blind spots, reduce duplication and produce greater risk insight for the business.
So how do risk functions optimize so that when they work together the whole is greater than the sum of the parts? Our study and PwC experience say to press forward in three areas, and to consider doing so collaboratively.
Automate: Automation continues to be a hot topic for good reason. More automation of routine tasks lets people focus on areas that require more complex thinking and decision-making. Consider collaborating among risk functions to find common opportunities for automation. Surveillance, validation and testing, reporting and remediation processing are all ripe areas for RPA deployment. And as data across the organization becomes more accessible and more reliable, risk functions can automate with greater confidence.
Equip the team: Some risk functions are collaborating to increase their collective skills and expertise—sharing resources with specific subject matter expertise, or building data science centers of excellence to serve all of their needs. Leaders can work together to create opportunities for staff to try new things in other risk teams, stretch themselves and then bring those skills back to their home group. In addition, CAEs, CROs and CCOs should consider starting citizen-led initiatives that encourage people to bring up ideas for digitization and automation that drive the function’s optimization forward. Challenge teams to think differently and to provide new perspectives. PwC’s own citizen-led innovation is bringing many new ideas and capabilities to our teams at an accelerating rate.
Unite efforts on strategic initiatives: Nearly all organizations are undergoing a strategic initiative, if not multiple. There are so many interdependent risks that need to be surfaced and the earlier the better. Many in our study highlighted how they coordinate their risk functions' involvement in on transformational programs and plug into them in more agile ways. Such an approach not only drives efficiency but it assures there is a risk perspective brought in early and throughout the initiative to help ensure the program’s strategic objectives are met and the anticipated value is delivered.
Look for additional blogs in this series to learn more about how risk functions are collaborating for stronger risk insights.