How are you reducing the risk of risk? Put another way: How is your organization’s strategy explicitly leveraging clarity of purpose, internal processes, and human resources to reduce and manage the risks that your organization encounters now or will encounter in the future? If the answer is “not very well” or “I don’t know,” the organization’s identity could be in jeopardy.

Gone with the wind are the days when leaders thought of risk management only in terms of how much insurance coverage was needed. Now they acknowledge the growth of risks in five organizational dimensions: strategy, operations, capital structure, human capital, and brand.

To quote Harvard Business School strategy experts Robert Kaplan and Dr. David Norton: “We must elevate the topic of risk management to a level of visibility more in alignment with the dynamic nature of the ever-changing marketplace.” Today, I believe that risk is defined as the universe of uncertainties that affect an organization.

While I acknowledge that government is not a business, the public sector shares many of the same risks in terms of a need for clear thinking in strategy and use of scarce resources for taxpayers at a time when budgets are shrinking and there is increased demand for greater accountability and transparency.

When you add to these risks the challenges associated with unfunded pension liabilities and the loss of institutional knowledge through attrition, the need for recruitment and retention strategies becomes abundantly clear as an important component of risk management.

So what are you doing to address these areas? How are you questioning your answers to challenge the status quo?

Where to Start

I recommend starting with an assessment of your organization’s current situation as a means for better understanding its risk profile and risk awareness levels beyond the traditional insurance areas. Distractions from growth, daily routines, crisis management, and generally being part of an organization can cause drift.

In the press of these distractions, why the organization exists may no longer be as clear. Whether we are doing the right things poorly or the wrongs things well are questions we fail to ask anymore. These represent real and immediate opportunities for an organization.

Leaders and managers within any organization making an effort to manage risk might consider adding the PESTEL analysis to their toolbox. PESTEL can be completed by anyone, anywhere without the aid of an outside adviser. Traditionally used to analyze trends in new or emerging markets, it’s an acronym that represents six dimensions of the macro environment in which organizations operate: political, economic, social, technological, environmental, and legal.

So what’s in your toolbox that you haven’t used in a while? Consider how you are defining and dealing with the new models of risk.