3 minute read
How do you transform isolated lessons into lasting change when non-financial risk failures make national headlines? In mid-November, ANZ’s root cause analysis put non-financial risk (NFR) under the microscope, sparking urgent debate across boardrooms and LinkedIn feeds.
In a LinkedIn post from Battleground’s Paul Minter, viewed over 15,000 times and shared by hundreds of risk professionals, six strategic questions struck a powerful chord with risk leaders across the globe.
This article digs into each of these six questions, providing actionable steps and insights to address immediate priorities, strengthen governance, and keep pace with the evolving landscape of non-financial risk.
1. How do you know your board and staff have the NFR skills your regulators require and stakeholders expect?
The easy task is to look again at your board skills matrix to check recency and assess how the scores are evidenced. More tricky is considering the calibration of scores against expectations. Recent court action against company directors by ASIC and governance consultations by APRA are moving the dial. Either way, non-technical training on how to challenge the management of non-financial risk will serve the board and the organisation well.
2. How do you know you bring in enough outside views to know what good looks like?
As risk management evolves, it is valuable to learn from the challenges and solutions of others. Organisations benefit from bringing in external viewpoints from new hires, independent advisors, or peer communities to benchmark their practices and stay current. The cheapest and most immediate of these options is sharing non-financial risk information within peer groups.
3. How do you know people at every level can link daily risk activities to outcomes for customers, regulators, and owners?
Frequently challenge your team members to describe how their areas of responsibility or projects ultimately improve outcomes for customers. When staff see how their daily actions contribute to the greater good, their sense of purpose and accountability grows. This habit aligns individual work with broader risk outcomes, gives everyone a reason to care about non-financial risk, and limits the feeling of ticking boxes.
4. How do you know leaders understand how their areas fit together, up and downstream?
Organise regular meetings where team members can discuss their work with colleagues in the next step of the process, those who are “upstream” or “downstream” from their role. This collaborative approach exposes the handover points and clarifies how activities interact between teams. When people understand their own tasks and how their output fits into others’ workflow, you break down silos and foster holistic thinking.
5. How do you know NFR data is turned into clear insight, themes and matters that need closer work?
Standardise data for incidents, issues, controls, obligations, and tolerances. Start with a library of agreed definitions that apply to the whole organisation. Implement quality checks for completeness, timeliness, accuracy, and consistency of data. Be sure to reconcile NFR data to board reporting.
6. How do you know NFR reporting helps you decide and act, rather than describe and defer?
Look again at the narrative supporting NFR reporting. Ask whether the “what” of an event objectively is accompanied by the significance and implications for tolerance and risk appetite (“so what?”), and presents the trade-offs needing a decision when determining changes to people, system, or processes (“now what?”).
These are questions we should ask ourselves on a regular basis but if any of the solutions need more detail please reach out to us at Battleground. It’s amazing how far NFR management can be pushed with a few changes, we can help you implement them before they become a root cause for something nefarious in your organisation.
