The Organizational Politics of Risk Management

Organizational politics presents a risk not often accounted for by risk models. It creates one of the many components of risk management risk — the risk that the risk management process itself is inadequate. Political considerations can lead to risk products that seem acceptable but which are fatally flawed; or worse, the risk products are plainly unserviceable, but everyone chooses not to acknowledge the problem. In this program we examine how organizational politics influences risk management, and discuss several measures for mitigating its effects.

Let's suppose that it's your job to identify possible risks that might arise during the course of a major reorganization. You recognize immediately that the engineers in the Springfield facility will not take well to the news that their organization will be relocated and combined with Portland. You're also aware that those who designed the reorganization based much of the justification for their plan on the savings from the Springfield/Portland consolidation. You think it only wise to allocate resources for voluntary turnover, and to create response plans to mitigate the consequences of product development delays caused by that turnover.

You're also aware that even broaching these ideas is politically risky. Does this conundrum feel at all familiar? In its various forms, it's quite common.

The Organizational Politics of Risk Management

The influence of organizational politics on risk management is usually ignored, and often a source of risk

What happens in these situations is usually subtle and often undetectable. Without realizing it, the risk manager shades the projections implied by these concerns so as to reduce the political risk of raising the issue. With each new shaded projection, the risk plan gradually becomes increasingly unrealistic. Its value to the organization is degraded to the extent that politics intimidates the risk planner.

Political dynamics is not responsible for all defects in risk processes, but controlling the impact of politics would help. In this program we explore ways not to eliminate the impact of politics on the risk process; rather, the goal is control. This distinction is important because eliminating all politics from the risk process — if such a feat were possible — would eliminate the creative effects of politics along with the destructive.

The framework for Enterprise Risk Management developed by the Treadway Commission provides a useful way to explore the effects of organizational politics. We will examine how politics affects the eight components of the framework:

  • Internal Environment
  • Objective Setting
  • Event Identification
  • Risk Assessment
  • Risk Response
  • Control Activities
  • Information and Communication
  • Monitoring

We can view the contributions of organizational politics to all these processes, taken together, as components of risk management risk: the risk that the overall risk management process is inadequate.

Understanding the sources of political contributions to risk management risk is a good beginning. But what we really need are a means of controlling how politics influences risk management. We explore the six principles of controlling political effects on risk management:

  1. The manner of creation and use of risk products is an emergent, systemic property of the organization
  2. Introducing the management of risk management risk entails dramatic organizational change
  3. Assessing risk management risk requires (possibly new) formal measurements
  4. The needed changes will feel wrong
  5. Part of the solution must be political
  6. Changing the political culture requires commitment and resources

Program outline

This program is available as a keynote, workshop, seminar, breakout, or clinic. For the shorter formats, coverage of the outline below is selective.

  1. Introduction
    1. What is organizational politics?
    2. The six components of the COSO framework for Enterprise Risk Management
    3. How organizational politics can influence the risk management process
  2. Risk management risk
    1. What is risk management risk
    2. The effects of organizational politics: elimination or control?
    3. The six principles of controlling politics
  3. Gaining control of organizational politics
    1. Kotter's Eight Guidelines for Organizational Change
    2. Tailoring Kotter's Guidelines for the politics of risk management
    3. Metrics for monitoring political effects
  4. Summary and wrap-up
    1. How we can apply these lessons in modern organizations
    2. What to do tomorrow
    3. Monitoring your own learning
    4. Resources for the future

Learning model

The one-day and two-day formats of this program include copies of my ebook 303 Secrets of Workplace Politics for all participants and their supervisors (a value). Ideal for those who like to supplement their learning by reading, or as a reference for later study. MoreWe usually think of workplace skills as if they were free of emotional content. We hold this belief even though we know that our most difficult situations can be highly charged. Despite these sincere beliefs, taking personal or organizational performance to the next level does require learning how to apply what we know even in situations of high emotional content. That's why this program uses a learning model that differs from the one often used for technical content.

Our learning model is partly experiential, which makes the material accessible even during moments of stress. Using a mix of presentation, simulation, group discussion, and metaphorical team problems, we make available to participants the resources they need to make new, more constructive choices even in tense situations.

Target audience

Executives, risk managers, managers, project managers, and leaders at all levels. We work either with individuals, or with an entire team or with a group drawn from many teams.

Program duration

Available formats range from 50 minutes to two full days. The longer formats allow for more coverage or more material, more experiential content and deeper understanding of issues specific to audience experience.

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