Risk Management in Business Partnering Engagements

In this article we propose a few simple techniques for increasing the efficiency and effectiveness of risk management in business partnering engagements: 1) planned opportunism 2) collective reflection-in-action 3) multi-frame thinking 4) emerging opportunities and 5) reporting framework – partnering philosophy.

Planned opportunism

Leaders should design business partnering engagements with the aim of creating an environment of planned opportunism. They should set behaviours and actions that prepare business partners for the future. For example, the central idea in the work of Kahneman, 2012 and Flyvbjerg, 2018 is that bias must be removed from both risk management and business decisions. It is not enough to eliminate errors and apply rational risk register methodology. As Lechler (1998) said, “when it comes to projects, it is the people that count”.

Collective reflection-in-action

Indeed, risk management aims to remove bias from management judgements in partnering engagements. Managers should reframe through reason or intuition until they understand the situation at hand. This kind of thinking is challenging and often counterintuitive. So partnering team members should design processes that engage key stakeholders in collective reflection-in-action dialogue. Thinking like a designer transforms the way leaders involve all key stakeholders. It also identifies heuristics for making better decisions which shape long-term capabilities.

Multi-frame thinking

Empirical data proves that overconfidence disappears when reliable and structured information is presented: information about the most likely developments and estimations of materiality, including the associated variances of the outcomes. This data is essential when addressing risk management in business partnering engagements. As Kahneman (2012) says, “…to maximise the predictive accuracy, final decisions should be left to formulas, especially in low-validity environments”. Thus, a holistic approach to risk management in business partnering is absolutely essential because such an approach improves leaders’ readiness to address any outlier event. Multi-frame thinking should be a powerful stimulus to the broad and creative mind-set imagination required to address human biases (see Planning and Forecasting).

Emerging opportunities

It is essential for leaders to keep their options open, as many options as possible. In other words, leaders should be prepared for emerging opportunities and remain detached from engagement successes and failures. This approach helps tackle ‘unknown-unknowns’, allowing for new insights to develop and changing circumstances to be approached in a flexible way. The collective reflection-in-action translates strategic imperatives into real actions, helping leaders to view patterns while distancing themselves from their natural impulses and emotions.

 Reporting framework – partnering philosophy

Furthermore, leaders should apply proper reporting methods, models and algorithms to assess and report data. The approach -- to blend rhetorical visual representations – encourages dialogue with all involved partnering team members. It offers leaders something concrete but at the same time is general enough to recognize patterns, psychology and the need for social technology. Overall, the proper reporting methodology leads to structural reform in the business partnering decision making process. As Macintosh and Quattrone (2010) observed, “Models and theories help us to see and understand things that we might otherwise overlook. However, by making some of this relationship visible and intelligible, they also obscure and exclude other possible vistas on management control problems. Therefore, we need to be acquainted with various forms of explaining and interpreting organizations and controls. Knowing one perspective only is too reductionist given the complexity of the phenomenon” (p. 51). Introducing proper reporting models positively affects risk management efficiency and effectiveness and thus becomes a useful tool not only for a structured dialogue with all involved stakeholders, but also for the business partnering philosophy.

Here we conclude that leaders must continue to experiment when managing risks in partnering business engagements. To do so, they should apply the ideas explained in the previous paragraphs: 1) planned opportunism 2) collective reflection-in-action 3) multi-frame thinking 4) emerging opportunities and 5) reporting framework – partnering philosophy techniques.

References

Flyvbjerg B., Ansar, A., Budzier, A., Buhl, S., Cantarelli, C., Garbuio, M., Glenting, C., Skamris Holm, M., Lovallo, D., Lunn, D., Molin, E., Rønnest, A., Stewart, A. and van Wee, B. (2018) “Five Things You Should Know about Cost Overrun”, Transport Research Part A: Policy and Practice, 118: pp. 174-190.

Kahneman D. Thinking, Fast and Slow (Great Britain: Penguin Books, 2012).

Lechler T. When it comes to project management, it’s the people that matter: an empirical analysis of project management in Germany (Calgary: University of Calgary Press, 1998).

Macintosh, N. and Quattrone, P. (2010) Management Accounting and Control Systems: An Organizational and Sociological Approach, Hoboken, N.J.: Wiley.