Issue Management
In a risk management framework, a lot of time is spent on the "risk" bit because the framework seeks to be forward-looking and proactive. But more often than not, risks cannot be looked at, especially at Board and Executive levels, one-at-a-time. A good risk management framework also includes robust issue management. Today’s post is designed to make you think about your organisation’s approach.
Let's dissect the characteristics of each:
Issue Management:
- Scope: Focuses on day-to-day operational issues.
- Approach: Quick resolution of immediate problems via existing channels and processes within your organisation.
- Governance: Managed by operational managers; senior managers should get concerned only when these issues are building but are not being resolved.
- Reporting: Regular updates (weekly/monthly) to management, and perhaps quarterly to the Board Audit Committee where critical issues are the outcomes of audits.
- Example: A spike in customer complaints about the loan application process being slow and cumbersome. The operations team implements an immediate review, streamlines the workflow, adds additional staff training, and temporarily increases customer support resources to handle inquiries more efficiently.
Strategic Issue Management (SIM):
- Scope: Tackles long-term, high-impact strategic issues.
- Approach: Involves cross-functional analysis and strategic planning.
- Governance: Overseen by senior leadership and, likely, the board.
- Reporting: In-depth quarterly/annual updates to executive management.
- Example: The retail bank plans to expand its lending portfolio but faces operational processing constraints, funding limitations, and the need to maintain a positive customer experience. Senior leadership conducts a thorough analysis of the bank’s current processing capacity, funding sources, and customer service capabilities. Then, they:
- Invest in automation and additional staffing to scale processing capabilities.
- Explore diverse funding strategies, such as securitisation, to support the lending expansion without straining liquidity.
- Implement digital solutions like an intuitive online loan application portal and real-time status updates to enhance customer satisfaction.
Both are integral to risk management and aim to proactively identify and mitigate risks.
Key Differences:
- Issue Management: Short-term, operationally governed, and frequently reported.
- SIM: Long-term, senior leadership involvement, with more connected and comprehensive reporting.
Key Question:
How do you manage strategic issues in your RMF? Perhaps you simply link your strategic issues (initiatives) to your risk profile and job done... leave the reporting on that to the strategy and project team? It is a start, but is that going far enough to connect risk and action?
#RiskManagement #StrategicPlanning #OperationalEfficiency #Leadership #BusinessResilience