Leadership Qualities of a Risk Manager

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Leadership Qualities of a Risk Manager: Implications of ISO 31000

INTRODUCTION

In an applied research conducted by John Hutto in 2009, findings are summarized as follows: " The Austin Police Department exists in a high-risk environment. Many of the policies and procedures the Department has in place are designed to mitigate or eliminate risk. The newly formed Risk Management Bureau of the Austin Police Department has been created to formalize many of the policies and procedures into a more comprehensive policy. At this time, the major shortcomings in the program are in the areas of training and communication. There has been limited training for the managers and administrators outside the Risk Management Bureau. Likewise, even though the Department is making progress towards a professional, innovative, risk management program, the communication to those in the organization about what is being done is lacking."Hutto, John (2009). Risk Management in Law Enforcement, Applied Research Project. Texas State University. http://ecommons.txstate.edu/arp/301/

These findings reveal two areas of weakness in risk management: managers' skills training and communication. Skills training relates primarily to Planning skill; Communication skills refers both to internal and external to the organization. Effective risk management greatly depends on the leaders' management skills and communication.
This paper shall attempt to discuss the significant leadership qualities of a risk manager as understood in the context of ISO 31000. The discussion starts by the understanding of Risk and Risk Management under the new ISO 31000. On the basis of this standard, the leadership qualities of a risk manager shall be analyzed.

RISK

Risk has been defined in various ways depending on the context it is used. Generally, Risk is the probability that a hazard will turn into a disaster. Vulnerability and hazards are not dangerous, taken separately. But if they come together, they become a risk or, in other words, the probability that a disaster will happen.
The Oxford English Dictionary (Oxford University Press, 1971) defines risk as a "hazard, danger; exposure to mischance or peril". Therefore, to put oneself "at risk" means to participate voluntarily or involuntarily in an activity or event that could lead to injury, damage, or loss.

Voluntary risks are hazards associated with activities that we decide to undertake (e.g., driving a car, riding a motorcycle, climbing a ladder, smoking cigarettes, skydiving, formula one racing). Involuntary risks are negative impacts associated with an occurrence that happens to us without our prior consent or knowledge. Acts of nature such as being struck by lightning, fires, floods, tornados, etc., and exposure to environmental contaminants are examples of involuntary risks.
Risks may also be defined as statistically verifiable or statistically non-verifiable. Statistically verifiable risks are risks for voluntary or involuntary activities that have been determined from direct observation. These risks can be compared to each other. Statistically non-verifiable risks are risks from involuntary activities that are based on limited data sets and mathematical equations. For example, we know the risk of a meteorite hitting a person is low, but because there is no record of such an event ever happening it is statistically non-verifiable. Statistically verifiable and non-verifiable risks are similar to apples and oranges in that they are both fruits but are so different that comparisons should not be made between the two.(The Risk Assessment Information System (RAIS) Copyright © 2009 The University of Tennessee)

Under the ISO 31000, Risk is defined as "the effect of uncertainty on objectives." The emphasis is on the "effect rather than the 'chances'". (Risk Management Update: ISO31000 Overview and Implications for Managers , InConsult, http://www.inconsult.com.au/Articles/ISO%2031000%20Overview.pdf) This new ...