When I run training for leaders to understand their organisation’s risk appetite statement, I ask them exactly the same thing. We discuss how policies, framework, processes and systems work in guiding decision making. They identify that some guidance is through “hard-wiring” such as a procurement system that does not let a procurement go through without certain criteria being met and with the right level of signoffs. At the other extreme the guidance is much more subjective. For example, a stakeholder consultation framework that provides guidance to staff on the level of consultation. It’s difficult to ‘hard wire’ the quality of the consultations.
How can your leaders help staff to understand appetite for risk when some guidance is subjective? The answer I guide them to is “Lunch and Learns” – or their organisation’s version of it. A lunch and learn is informal training where staff bring their lunch to the session and the group discuss the learning topic. In this case, the leader will bring a decision (past or upcoming) and facilitate a discussion on how the guidance on appetite for risk might be interpreted.
While the leader can’t transfer all of their thinking about appetite for risk in one session, they can impart some critical points and over time grow the team’s understanding. Team decision making will improve accordingly. As my Mum used to say: “Not all good things come at once!”