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Managing shared risk: a big step forward

‘Not all superheroes wear capes’ is the theme of the Department of Finance’s senior leadership risk workshops. Since the release of Defence’s first risk management policy in July 2015, the senior leadership has been working towards developing a positive risk culture. To support this effort, in partnership with the Department of Finance, a focused senior leadership risk training program was rolled out by Defence, with eight risk workshops run in 2016–17.

The program was attended by over 40 per cent of the Senior Leadership Group, with the workshops well received by all attendees. This training program, supported by a renewed focus of the Defence senior committees on shared risk management, has helped move Defence towards a positive risk culture.

This provided the environment in which Defence could implement a new and innovative approach to understanding and managing shared risk. In February 2017, the Enterprise Business Committee agreed to adopt a systems approach to identifying and managing Defence’s most complex risks.

When looking at Defence risk management as a system, three interdependent systems of risk management emerge. These risk systems are coupled with key strategic accountabilities and responsibilities and integrated as part of decision-making systems and processes.

Defence’s three risk management systems have identified that risk management at the three organisational levels of Defence—strategic, enterprise and delivery—adapt to cater for the unique needs of the decision-makers. The decision-making context at each level differs in terms of the tempo in which the decisions are made, the complexity and impact of the decisions, and the associated planning horizon. As such, Defence’s risk management approach has been designed to support the nature of the decisions being made and the needs of the decision-maker.

Implementing this approach provided the context and environment for the Defence senior leadership to understand how to approach the management of Defence’s most complex risks. The key to this model was recognising the central role of enterprise risk management, which translates the impact of the changes in Defence’s strategic risk context in a way that can be understood, managed and monitored by Defence personnel.