Part 8 |  Risk Managers at Risk:  7 Things You Need To Do To Save Your Company…. And Your Job

I hear and I forget. I see and I remember. I do and I understand. _{-Attributed to Confucius}

Introduction

In a recent LinkedIn post, my colleague Steven Strickman pointed out that some additional troubling insights about the state of ERM that had overlooked. One was that the majority of organizations surveyed—by their own admission—lacked end-to-end processes and overall maturity in their ERM process. Perhaps more troubling, however, was their training performance, as nearly 70% of respondents indicated that senior management had received no ERM training within the last two years! Technical training is a crucial aspect of professional development in any industry, particularly in the regulation and technology-driven world of financial services and insurance.

Can you imagine a comparable time lag in Compliance, Employee Practices, or Product Training?  

HR professionals in Financial Services argue passionately, and rightly so, that there’s an intensifying war for talent, especially post-Covid, the Great Resignation, etc. Yet, we are failing not only our future employees, but even our existing employees by not equipping them with essential knowledge and skills. What’s going on?  

We don’t have all the answers, but we do have observations on how to make ERM training a more important and interesting part of the overall ERM process, and provide ERM professionals with better credibility and visibility within their organizations.

Tailored Learning By Style

Picture yourself in a room (like high school or college), listening to a monotonous lecture on quadratic equations or trigonometric functions. It's likely to be a tedious experience, especially when it’s chock full of theoretical concepts and lacks a practical context for understanding how to apply those concepts. In addition, communication is almost completely one way. Although the presenter may field questions during or after the lecture, lecture “participants” are “recipients,” and are often uncomfortable interrupting or slowing down the class when they don’t understand something.  As a result, considerable opportunities for comprehension and knowledge retention are lost. Are concepts like Risk Thresholds, RAROC, VAR any different? And therefore, is ERM training any more effective?

Training often fails to consider “learning how people learn" to address their audience’s needs and spark their interest. Let me explain. There has been considerable research on how people learn and communicate, with the insight that there are 7 or 8 learning/communication styles, with one being dominant in any given individual. [1] Just like being right or left-handed, you are more comfortable and proficient with one style, although you may use the others at different times and to a lesser extent. Have you ever had a conversation with someone, and everything just clicked in terms of communication and understanding? Likely you both have the same dominant learning style.  

And what about those instances where, as much as you tried, you just couldn’t get through to another person? Most likely, your dominant learning styles were different. The funny thing about human nature is that people don’t recognize this and often use their dominant style more forcefully rather than translating their thoughts into the other person’s style. This just makes things even more frustrating for both parties!

So, what does this have to do with ERM training? We would suggest a lot, because by addressing the audience on its own terms, you make the training much more engaging and meaningful.

Before we begin any ERM focused training, we start with a brief experiential exercise by breaking the audience into small groups of 5-6 people, with the groups competing to solve a given problem, typically under a 10–15-minute time constraint. We introduce the challenge in a central location, and each group works in private breakout rooms, reporting their solutions to the central location when they are finished. We then review and evaluate each team’s proposed solutions and later debrief them on their approaches.  

The exercise is powerful because it reveals each person’s individual approach and how it corresponds with or differs from the approach of others on the team. Nothing is more predictive of a team’s success or failure than their ability to recognize and work through these differences. By debriefing the teams on how their efforts succeeded or where they went off-track, they gain a greater appreciation for their individual differences, which ironically, makes them subsequently function much better as a team.

In addition, we calibrate the training approaches used in our training discussions based on the insights we derive from the experiential exercise. [2] Concrete examples need to be created and translated into the different learning styles of the participants to ensure understanding, relevance, and audience engagement. This approach drives active participation in the learning process. This active involvement ensures that participants are not merely passive listeners, thereby enhancing their understanding and retention of the subject matter.  

Typically, they find this approach to ERM training much more engaging and consistently grade it as more worthwhile and relevant than what they had previously experienced in other training sessions. It’s a shame that our high school and college instructors weren’t as familiar with this approach.

Other Considerations You May Want To Address

In addition to Tailored Learning By Style, all training (but especially ERM training) becomes more meaningful when participants can see its practical application. By incorporating real-world examples into the training, we can demonstrate how the theoretical concepts being taught are used in everyday life. In today’s complex risk environment, we could discuss how demographic, economic, or political challenges can create the potential for catastrophic losses, either individually or through correlated risk events. This not only makes the learning process more interesting but also helps participants remember the concepts better as they can relate the events to things they hear about daily on newsfeeds, Facebook, etc. This is a free and easy way to reinforce the knowledge and methodology that you have introduced in your sessions.

Attempting to grasp a large amount of information at once can be daunting. It's akin to trying to consume an entire meal in one bite! To make the learning process more manageable, complex topics are broken down into smaller, digestible parts. This method, known as incremental learning, starts with the basics and gradually introduces more complex ideas.

Obviously, lectures and handouts may not suffice to explain complex concepts. In such cases, visual aids such as diagrams, charts, and videos can be invaluable. These tools can simplify complex ideas and make them easier to understand. For instance, a flowchart could be used to illustrate the steps involved in explaining a risk correlation matrix, or a video could be used to demonstrate a complex risk concept. You should attempt to ensure that all participants easily understand the materials. Tailor your message to communicate to the dominant learning style of each participant.  By catering to specific learner groups, these aids can make the learning material more engaging and comprehensible.

Reinforcement of previously learned material is also a powerful tool in the learning process, as it enhances recall, thereby making the training “stick.”  This is unfortunately one area that is woefully neglected in most organizations. As an ERM professional, you are obligated to ensure that everyone in your organization not only learns how to be a risk manager, but remembers how to be one as well.  

There are many schools of thought here, but most training information and memory of it decays rapidly after the initial delivery, unless it is reinforced. Generally, three reinforcements seem to work best, usually at 30, 90, and 180 days after the initial training. The good news is that you don’t need to repeat the training, provided that you reinforce shortly after the initial training. Short email reminders, questions, or anecdotes seem to be effective if they are relevant and directly related to the topics of the initial training.

Conclusion

Technical training can be a challenging endeavor, given the complexity of the subjects involved. This is as true in ERM as in other areas, but few organizations have figured out how to make the training more interesting and relevant so that participants enjoy rather than dread the experience. By applying the insights and approaches we have outlined in this article, you can propel not only ERM but your entire organization on a better training path. With the right strategies and tools, all training sessions—even ERM ones—can be transformed into engaging and rewarding experiences. The ultimate goal is not just to acquire knowledge but to apply it effectively in real-life scenarios. You know what to do. So, keep learning, stay curious, and learn by doing. And continue to explore and introduce others to the fascinating world of ERM. Your organization and your peers will thank you!

[1] Howard Gardner, Theory of Multiple Intelligences (Visual, Linguistic, Mathematical, Kinesthetic, Musical, Interpersonal, Intrapersonal, Naturalistic).

[2] If you are interested in learning more about the exercises we use and would like to try them, feel free to contact us directly. We only ask that you keep them confidential since they lose their impact if known to participants in advance.

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