Innovation: Risk management lessons
Innovation, research and development have long been thought of as keys to companies' long-term success.
The leaders in patent approvals love to tout their prowess in this area. A recent essay in Business Finance finds some lessons for risk managers from the ability of IBM, a perennial leader in the patent race, to generate innovative patentable ideas year after year.
One IBM executive attributes the company's success to strong multi-discipline teams, "relational creativity," and customer centricity. These elements, the author argues, can also spell success when it comes to risk management and compliance. Consider the rise of multi-discipline teams, which foster creative approaches to problem solving.
"The same holds true for risk management breakthroughs inside companies where cross-functional risk committees are more effective (than risk managers acting alone) in identifying suitable risk appetites (and then monitoring actual risk diets) for various parts of the business," he writes.
In addition, the idea of a strong cross-functional risk management and GRC committee could be easily applied across various units, helping to end the silo-ization that the GRC industry has decried for so long. Regarding customer centricity, a deep understanding of the internal clients and their risk needs will of course lead to better "product."
All in all, this is perhaps one way to stoke the strategic benefits of a strong GRC program. I'd like to the think that the long-term benefits to a strong GRC program would be comparable with the benefits of innovation and R&D.
- here's the essay