Navigating the Maze: Consultants as Catalysts in Board Governance and Risk Management
In the vast and complex world of business, the sheer breadth and depth of skills required to effectively govern an organisation can be overwhelming. Enter the expert consultant, the silent navigator who helps leadership teams steer their ship through turbulent waters, managing risks and turning them into opportunities.
Liia, under my leadership as its founder, is humbly championing the use of expert consultants to elevate performance, risk management, and value creation across organisations. Why, as a leader, do I advocate for the engagement of consultants? Why, as a director, do I myself engage consultants? Let's break it down.
Consultants: Bridging Knowledge Gaps, Managing Risks
Every organisation is a risk-taker, a value creator striving to serve its stakeholders. Yet, as the complexities of the external environment converge with the myriad facets of business operations, knowledge gaps inevitably appear. Here's where a consultant's role gains prominence.
A consultant provides objectivity and infuses expert knowledge into the organisation. No individual director can have all the answers. Consultants fill those knowledge gaps, providing clarity and insight that empowers directors to discharge their duties effectively, make informed decisions, and manage risks.
Think of it as providing the organisation with a high-definition lens to view its operations, market conditions, and future uncertainties. Consultants enable organisations to dissect complexities, make sense of multifaceted business realities, and chart a course of action grounded in expertise and insights.
Aligning Risk Appetite with Governance
Every organisation, like a daring adventurer, has a certain appetite for risk - the level of uncertainty it is willing to accept in its pursuit of objectives. But determining this risk appetite isn't straightforward. It's like navigating a labyrinth, balancing regulatory compliance, stakeholder expectations, and the drive to innovate and grow.
Consultants are the organisation's compass in this labyrinth. They help leadership define and refine risk appetite, align business activities with it, and ensure compliance with regulatory requirements.
Akin to a fish oblivious to the water it swims in, leaders might not always perceive the risks intrinsic to their environment. Consultants, on the other hand, with their objective view, can help leadership gauge the potential benefits and adverse impacts of certain risks, and thereby, agree upon an acceptable level of risk.
Consultants at Work: Real-World Examples
Let's consider a real-life instance where a consultant assisted a small directional drilling company with a strategic shift - moving from a local supply model to sourcing directly from offshore manufacturers. This decision came with financial risks, operational risks, and market-related risks.
An expert consultant stepped in to analyse the risks, identify potential adverse events, and recommend risk mitigation strategies. Through their expertise, the consultant helped the board adjust its financial risk appetite and create a management plan.
Even when it comes to public perception and trust, consultants play a vital role. In one case, a healthcare provider engaged a consultant to enhance its public image, directly addressing its reputational risk appetite.
In another example, a university leveraged consultant advice to navigate potential risks associated with government policy changes and shifts in public opinion. Consultants, like a political compass, helped the institution stay aligned with its mission despite shifting external conditions.
Consultants: The Beacon of a Risk-Aware Culture
At Liia, we firmly believe that consultants are not just temporary troubleshooters. They are enablers of a risk-aware culture, supporting boards and management teams in risk identification, evaluation, and treatment. By actively collaborating with organisations, consultants foster a culture where risk considerations are integral to decision-making and operational processes.
However, reliance on consultants should be balanced with developing internal capabilities. By engaging consultants for their specialised knowledge while investing in employee development, an organisation can effectively address knowledge gaps, foster a robust risk culture, and promote long