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Building trust and gaining a sit “at the decision-making table” is a challenge many Chief Risk Officers and risk practitioners share. I have seen risk functions ticking all regulatory boxes and having all frameworks in place, while having little impact on their firm’s strategic and operational direction.
Implementing the Aevitium Integrated Risk Framework, starting with both vision and mission statements, brings about a significant shift in internal perception within organisations.
Firstly, it provides employees with a clear sense of purpose and direction in their work. This shift in perception transforms risk management from a reactive, compliance-driven task to a proactive, strategic endeavour. It aligns individual efforts with overarching organisational goals, fostering a culture of shared vision and collective responsibility.
Additionally, by emphasising values and culture in the vision and mission, it reinforces a positive organisational identity, creating a more engaged and motivated workforce. Overall, this approach elevates risk management from, potentially, a back-office function to a fundamental enabler, reshaping how employees perceive and engage with risk across the organisation.
Both vision and mission statements complement each other by providing a cohesive framework that connects the Risk function's long-term aspirations with its present purpose and activities. Together, they establish the strategic direction, guide decision-making, align actions, and communicate the function's values and goals to both internal and external stakeholders.
Providing Context for Risk Vision and Mission Statements
To craft a robust vision and mission statement, it is imperative to consider various attributes that influence an organisation's risk profile and strategic objectives. For example, these attributes include:
Business Strategy
Investment Strategy
Operational Setup
Organisational Culture
Governance Structure
Human Resources and Talent Management
Technology and Digital Transformation
Etc.
Risk Vision Statement Development
Vision Statement answers a fundamental question:
"Where do we want to go?"
A vision statement is a powerful articulation of an organisation's long-term desired future state and aspirations. It paints a vivid picture of what the organisation aims to achieve and the impact it envisions making.
Key Requirements for a Risk Vision Statement
· Inspiring and Aspirational
· Clear and Concise
· Aligned with Values and Culture
· Realistic and Achievable
· Timeless and Enduring
Benefits of a Well-Crafted Risk Vision
· Direction and Focus
· Employee Engagement and Motivation
· Strategic Alignment
· Decision Making and Prioritisation
· Stakeholder Communication
· Adaptability and Resilience
Example of a Risk Vision Statement
“To be the trusted protector of investor capital, prioritising preservation, responsible investing, and risk resilience, while delivering sustainable long-term value through prudent risk management and the integration of ESG principles.”
Learn more about vision statement development with this short video.
Risk Mission Statement Development
Mission Statement answers fundamental questions:
"What do we do, who do we do it for, and how?"
A mission statement succinctly defines the purpose, objectives, and core values of an organisation. It communicates the organisation's fundamental reason for existence, what it does, and who it serves.
Key Requirements for a Risk Mission Statement
· Concise and Clear
· Specific and Relevant
· Inspirational and Motivating
· Realistic and Achievable
Benefits of a Well-Crafted Mission Statement
· Strategic Alignment
· Decision-Making Framework
· Employee Engagement
· Brand Identity and Reputation
· Focus and Prioritisation
· Stakeholder Communication
Example of a Risk Mission Statement
“Our mission is to secure and nurture our clients' investments. This entails a strong emphasis on capital preservation, responsible risk management, and sustainable investing. Through the integration of ESG principles and the practice of prudent risk strategies, we offer enduring value while shielding against unwanted losses.”
Learn more about mission statement development with this short video.
Challenges and Considerations
Implementing vision and mission statements within an organisation's risk management framework presents a transformative opportunity, but it's not without its challenges. Resistance to change is a primary hurdle, as employees and stakeholders may be accustomed to existing processes and may hesitate to adopt new strategic frameworks. Overcoming this resistance requires effective communication, education, and a clear articulation of the benefits of the new approach over time.
Ensuring alignment with the existing organisational culture is equally vital. If there's a disconnect between the statements and the prevailing culture, it may create confusion or scepticism among employees. Therefore, a careful assessment of the culture and, potentially, its evolution to harmonise with the newly established vision and mission is necessary. This includes using language and wording internal stakeholders would recognise.
Striking the right balance between aspirational goals and realistic objectives is essential. While the vision should inspire and stretch the organisation, it must also be grounded in reality. Unrealistic or overly ambitious statements may hinder progress. Moreover, inclusivity and stakeholder involvement are crucial. Failing to involve key stakeholders may result in statements that don't resonate with the broader organisation, leading to a lack of buy-in and commitment.
Additionally, ensuring alignment with the organisation's broader business strategy is imperative. Misalignment can cause confusion and hinder the effective integration of risk management into strategic decision-making processes. Regular review and adaptation are also essential, as vision and mission statements need to reflect changes in the business environment, industry trends, and organisational priorities. Failing to do so may lead to a misalignment between the statements and the evolving needs of the organisation.
Finally, effective communication of the statements is paramount. Simply crafting vision and mission statements is not enough; organisations must also ensure that they are communicated effectively to all stakeholders. This requires a well-thought-out communication plan that ensures understanding and buy-in at all levels of the organisation. By being aware of and proactively addressing these potential challenges and considerations, organisations can strengthen the effectiveness of their risk management efforts through well-defined vision and mission statements.
Maintaining Risk Vision and Mission Statements
It is necessary to regularly review and assess the relevance and alignment of both vision and mission statements with the organisation's evolving context considering the following triggers:
Strategic Planning Cycles
Organisational Changes
Market Disruptions or Industry Trends
Stakeholder Feedback
Etc.
Client Business Case
The Opportunity
By reinforcing its risk management activities and capabilities, the Risk function could be repositioned as a strategic business partner and enabler, while increasing its clout and influence across the firm.
The Objective
Elevate the Risk function from operational to strategic excellence, unlocking untapped potential and paving the path to enhanced sustainable growth.
The Deliverables and approach
· Risk Management Function Vision Statements
· Risk Management Function Mission Statements
Both deliverables were crafted and finalised during a couple of bilateral workshops with the client. Each workshop was designed as a guided educational and delivery pack to inform the client on the purpose, requirements and examples of both artefacts with a few examples to support the discussion. A particular attention was paid to wording alignment with internal practices and focus to support internal buy-in.
Within 1.5 days, the mission was completed.
Impact
Within a couple of months, the client was able to articulate how their function contributed to the strategic objectives of their firm and repositioned themselves as a strategic partner.
In doing so:
The Head of Department shifted their focus from “doing” to “engaging” and “leading”;
This increased engagement led to meaningful discussion on value add of the risk function and clarification of expectation from executives and board director; and
The Risk team activities have been gradually shifting on core mission and vision.
Though the impact is initially more “qualitative” than “quantitative”, the clarity both vision and mission statements bring enables the function owner to shift their focus and change how they are perceived internally. This, in turn, unlocks meaningful strategic discussions leading to further changes and transformation. For example, in that context, the client decided to focus on the repositioning of their risk reporting to turn vision and mission into tangible and visible organisational benefits.