Uniting a C-suite and workforce divided on risk

Organizations need to take risks to innovate, grow and find opportunities in disruption. But many Canadian companies are hindered by disconnects between how the C-suite and other parts of the organization view their risk appetite, risk culture and the value of the risk function.

The Canadian results from our Global Risk Survey revealed several striking gaps.
 

of C-suite respondents said they’re eager or open to taking risks. But that number jumps to 71% outside the C-suite.
 

of C-suite respondents said their organization fosters a safe-to-fail culture that encourages employees to experiment. Conversely, separate PwC research found that only 44% of Canadian employees say their manager tolerates small-scale failures.
 

of risk management respondents said they help guide their organization through complex change. Yet just 51% of respondents from other parts of the business feel the same way.
 

These findings point to a leadership divide. Employees want to take on risks, exercise their creativity and attack problems in unconventional ways. But the findings also highlight opportunities for business leaders to enhance their organization’s competitive advantage by changing the way they see risk.

In this article, we explore the factors that cause these divides, how executives and the risk function can close their organization’s gaps and the technologies that can help them realize their ambitions.

Additionally, the adoption of generative artificial intelligence (GenAI) may erode mentorship and learning opportunities for more junior employees. It can also create new data privacy, cybersecurity and reputational risks that are triggered by employee behaviours—making it important for companies to provide visible leadership, implement the right processes, reinforce desired behaviours and provide staff training and reinforcement as part of their approach to managing GenAI risks.

At the same time, other workforce risks can arise if an organization moves too far in the opposite direction and discourages employees from experimenting with new tools and technologies. This can diminish employees’ workplace experience and erode a company’s status as an employer of choice, making it harder to attract and retain top talent. 

This disruption is fundamentally changing the way organizations think about managing workforce risks. Creating value tomorrow starts with understanding the workforce risks you face today.

Culture is an important determinant of workforce risk. Yet many Canadian companies are still in the early stages of measuring and analyzing how culture enables risk-taking and contributes to workforce risks. But that’s started to change. For example, Canadian banking regulators are asking organizations to be more mindful of the risks their culture can create and manage them accordingly.

For example, a pharmaceutical manufacturer that prioritizes product safety thinks differently about certain risks than a tech startup working to disrupt an established market. Business leaders can benefit from considering the organizational culture they want to foster, the actions needed to shape and monitor it, and how that culture connects to their organization’s risk appetite.

Creating an environment in which employees are comfortable pushing boundaries requires rethinking the traditional command-and-control structures many business leaders experienced over their careers. Different leadership styles can encourage teams to take the calculated risks needed to create value in this time of uncertainty. It can also make them more comfortable raising issues as they arise—without fear of repercussions—so their organization can proactively manage its risks.

This starts with making sure your organization uses common language to talk about risk. Often, different groups may use different words to describe common activities. This can reduce the effectiveness of your risk management framework and limit both your ability to manage risks and pursue opportunities by taking informed risks. Conversely, adopting a shared risk language that includes a clear definition of each risk your organization faces can improve collaboration, risk understanding and business outcomes.

Using common language is just one part of a wider rethink of your daily interactions with your teams. We’ve seen executives align more closely with their workforce by focusing on four factors:

Risk professionals can better help their organization adopt a common risk culture by taking a human-led and tech-powered approach to combining their functional expertise with new digital capabilities that generate real-time key risk indicators.

For example, consider how financial institutions already use technology to analyze trading books in real time to flag and manage liquidity risks and concentration risks, among others. Organizations have similar opportunities to manage workforce risks, including those stemming from workforce strategy, leadership and environmental, social and governance factors, among others.

To help businesses enhance their tech-powered risk management capabilities, we developed a workforce risk integrated solution that includes a digital diagnostic tool that provides insights into their unique issues. This lets organizations harness the power of their data to better instill the right cultures and behaviours across their workforce as well as attract and retain employees and build stronger relationships with customers and regulators.

Our survey data shows many executives and employees are divided on risk. This means that organizations that move quickly to close this gap can find value-creation opportunities where competitors still see threats. 

Companies that use behavioural analytics data to understand their workplace culture can encourage the right risk-taking behaviours across their organization. We believe business leaders would do well to focus on culture as they explore and manage their myriad workforce risks. And we’re ready to enhance your visibility into these risks with digital capabilities such as our workforce risk diagnostic tool. 

By gaining this visibility, organizations can act boldly and purposefully—turning risks into enablers of change and growth.