When things go wrong in finance, money is lost and reputations are tarnished, but typically lives are not lost. When things go wrong with aeroplanes, the results can be catastrophic. Planes fall out of the sky and people die.
" Despite the difference in industries, finance can learn from aviation"
Rob Molyneux, ANZ General Manager Risk Metrics
The airline industry therefore takes risks and the consequences of not managing them very seriously. They quickly learn from their mistakes. But despite the difference in industries, finance can learn from aviation.
Safety is the number one priority for every part of an airline business – from air crew to ground crew, from engineering to baggage handling and check-in. Scheduling, lifting, communicating, everything. As a consequence, although airlines don’t have dedicated ‘Risk Departments’, they have vast numbers of people who manage risk.
Good risk management is all about open and healthy culture. It’s about the people you employ and the way they behave, not policies and values written in documents. It is day-to-day behaviours. Every leader should know their people and have confidence they’re making the right decisions for the organisations and its customers.
When it comes to culture, too often it is believed this can be improved by writing more policies and hiring more second line resources. But we know that people who want to do the right thing will read policies and adhere to them. Those who do not want to comply will just ignore the policies – so the answer is not to create more policies.
A good culture can always work around a poor process to manage risk well but a poor culture will not utilise the benefits of a good process (or will work out ways to get around it).
Frameworks, policies and other forms of documentation merely set the ground rules for consistency of data capture to allow for informed analysis to support decision making – they do not control risks or prevent them eventuating.
The airline industry talks about mistakes and learns from them. The capturing of events is seen as positive and they are really strong with non-punitive reporting of errors and incidents. Reporting problems is about identifying root causes to avoid them happening again, not about blaming individuals.
Organisational silos are a foreign concept in the airline industry. If risk is in an organisation’s DNA employees will automatically think more broadly across the enterprise not just vertically within it. If the enterprise suffers everyone suffers.
Has the finance industry in general spent too much time on models and frameworks at the expense of culture? Are the models and frameworks an excuse for general employees not owning and managing their risks?
No matter the industry, risk professionals of the future will require the ability to influence the business to own and take accountability for managing their own risks. We’ll know we’ve got it right when we’ve managed ourselves out of a job.
Rob Molyneux is General Manager of Risk Metrics at ANZ and Mark Linter is a Risk Control & Policy Specialist at ANZ.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
04 Oct 2016
12 Oct 2016