By Fusion Risk Management:
As hope takes hold and the sun begins to set on a global crisis like none of us have seen in our lifetimes, many firms are finding themselves at a crossroads − freshly awakened to the realization that it is not enough to wait for the worst to come but unsure as to how to prepare for it.
We find ourselves in a world changed, forever. Fundamental, long-standing assumptions shifted seemingly overnight. Trends accelerated by a factor of decades. Our reliance on technology, and each other, amplified in the wake of disaster. And, with every shift, a new set of opportunities at stake and risks to bear.
Even prior to the pandemic, there were indications of a global shift in the priorities of financial services institutions, hedging slowly toward greater globalization and technological dependency, then all at once.
At the beginning of 2021, many firms have aligned on a roadmap toward building more resilient operations. However, when managing a global resilience effort, cultural and geographical considerations such as interpersonal dynamics, shared norms, values, regulatory expectations, political events, and external forces can have a marked impact on firms’ ability to set direction, let alone make progress.
Bouncing back stronger from adversity requires more than a set of priorities, a plan, and a set of competencies. It requires the collective buy-in and shared culture of commitment to the underpinnings of a resilient organization.
In early February, our growing community of renowned leaders in risk and resilience gathered again, led by a panel of thought leaders − hailing from the UK, Ireland, Middle East, and the US − representing what it means to lead risk and resilience on a global scale.
Read on for five takeaways from that discussion, shining light on key strategies for breaking through the invisible boundaries of global business and implementing firm-wide risk awareness and resilience on an international scale.
- Breaking through invisible barriers
The ability to build risk awareness and resilience culture is closely connected to the influence of leadership, firm maturity, change readiness, people culture, and regulation.
When taken together with the permutations of national, ethnic, and even regional work cultures, it results in a dizzying mix of cultural perceptions, priorities, and ways of working.
Executive Financial Services Roundtable Survey (n=45), February 2021
These permutations exist everywhere, even when people are part of the same firm. Inevitably, national and regional culture prevails over even the strongest organizational cultures.
With the interconnected global economy in full swing, culture is an increasingly common issue in sustaining change and getting work done. Even where financial services don’t span geographies, many more of us live and work in such ecosystems. Financial services is becoming increasingly fragmented, often a networked web of providers, partnerships, and acquired companies.
Cultural awareness across nations is becoming a must for all, practitioners and leadership alike.
Erin Meyer provides one example of the work-style and results implications of cultural differences in her book, The Culture Map:
Jorge da Silva, a Brazilian engineer at a steel company recounts how they tried to convince the team in Houston, Texas to adopt a new process created by their Latin American offices.
“We kept trying to explain to them why the new process was so important. However, we didn’t seem to be persuading them. So we developed a very detailed presentation that explained, slide by slide, the key concepts addressed in the new method. But the more detailed we became, the less responsive our American teammates were.”
When an American friend suggested that rather than using reasons, he should show an example of what could happen with their new approach. Mr. Da Silva invited two key Houston team decision-makers to Brazil to witness the operation themselves.
“We took two days to show them around the plant, to have them interview the workers on the assembly lines, and to review the production reports. They got a really good look at the process in action, and they asked a lot of questions. And when they got back to the U.S., they got the ball rolling. Now we have the same safety process in the U.S. that we have in Brazil.”
Walking through the process was much more convincing than the logical explanation to the American team.
In his HBR article, “The More Things Change, the More Our Objections to Change Stay the Same,” Bill Taylor, Founder of Fast Company, describes the art of creating a sense of urgency among diverse teams as the third principle of change:
My friend and Fast Company cofounder Alan Webber puts it well. Progress, he likes to say, is a math formula. It only happens when the cost of the status quo is greater than the risk of change. That’s why the third principle of change is for leaders to encourage a sense of dissatisfaction with the status quo, to persuade their colleagues that business as usual is the ultimate risk, not a safe harbor from the storms of disruption.
- Not one size fits all
Those in our roundtable community whose scope includes leading risk and resilience in the Middle Eastern and APAC regions were more likely to report the importance of geographic differences in leading successful risk and resilience change initiatives.
In contrast to Europe and the US, cultural perceptions and mindsets about risk tend to be centered on individuals (the expectation that individuals are responsible for risks related to their sphere of authority) as opposed to the collective (expectation that risks are managed and mitigated as a group).
Our expressions and our preferences are culturally “programmed” at an early age.
Styles across cultures can have a dramatic impact on change initiatives, such as risk and resilience. Being mindful of individuals’ communication, collaboration, time perception, and trust-building habits can ensure your change initiative is working with the grain of the prevailing mindset, values, and behaviors.
- Jumping off the deep end
Risk appetite and tolerance is heavily weighted by product and service line factors, including:
- Lifecycle stage
- Regulatory environment
- Rate of growth (product, service, or segment)
- Strategic importance
- Nature of product or service
Risk and resilience teams can be key strategic partners to the business, surfacing hidden risks, spotting opportunities, and helping the firm develop strategic foresight in a highly volatile operating environment. Understanding the delicate defensive-offensive balance of risk-avoidance and risk-taking culture in product and service portfolio management can help your team cultivate collaboration with those responsible for leading growth initiatives.
One key example of risk-taking in portfolio management : mergers and acquisitions. 2020 was a boom year for mergers and acquisitions in financial services. According to Bloomberg,
Big firms in good shape are looking for scale and diversity amid an uncertain economic outlook. They’re also looking for new business models and technologies that have proved their mettle this year and can be expected to thrive in the altered landscape beyond the coronavirus pandemic.
But M&A can be an extreme case of risk-taking, with many carrying war stories of workplace culture and technical integration gone awry. Understanding the cultural tenets of the acquiring and target entities can help your firm get ahead of and mitigate the risks involved in merging firms of various sizes, dispositions, and nationalities.
Similarly, when thinking about the n-party dependencies in delivering a product or service, cultural qualities may amplify risk or require distinct strategies to develop effective partnerships. N-party entities introduce cultural variety beyond that of your native firm.
Inversely, your cultural preferences as a servicing provider to your customers can also introduce important nuances in risk awareness and resilience expectations. Our participating financial market infrastructure firms described how setting clear expectations with customers has helped them develop effective end-to-end scenario tests, leading to effective working relationships, customer trust, and greater brand equity.
Leveraging a North Star design for resilience, both internally and externally, can be a critical grounding force when catalyzing change with diverse audiences.
- What’s in it for me?
Communicating the value of risk awareness and resilience fundamentals in terms your audience can relate to is imperative to advancing your ability to integrate into the fabric of your firm, from the boardroom to the front line.
This journey map from our executive workshop indicated the stark differences in goals, operating rules, language, and touchpoints for four key audiences within many financial services firms. It may seem obvious, but taking the time to understand your audience, what they care about, and how risk and resilience teams can help them achieve their objectives and grant better business outcomes overall, can have more to do with the success with your initiative than the design of the program itself. Stepping outside of the familiar vernacular of your “program” and into the everyday language of business resilience breaks down long-held barriers preventing your firm from mitigating risk, achieving key efficiencies, and capitalizing on opportunity.
Above all, “when you take care of your team, they take care of your customers,” is seen as a universal guiding principle for our panel. Ensuring your risk and resilience goals are aligned to the needs of the enterprise − and those that embody it − is a critical step toward making it impactful to your customers, and ultimately, for your business.
- What did you say?
The majority of our roundtable participants report working with English-speaking teams. However, even when we speak the same language, do we mean the same things?
In The Culture Map, Erin Meyer discusses the cultural variances in shared norms and expectations when providing feedback. The Chinese manager never criticizes a colleague openly or in front of others, while the Dutch manager learns to be extremely direct. Americans are trained to sandwich negative feedback with positive feedback, while the French are trained to criticize with zeal and be sparing about positive feedback.
One way to begin gauging how a culture handles negative feedback is by listening to the types of words people use. More direct cultures tend to use what linguists call upgraders, words preceding or following negative feedback that make it feel stronger, such as absolutely, totally, or strongly: “This is absolutely inappropriate,” or “This is totally unprofessional.”
By contrast, more indirect cultures use more downgraders, words that soften the criticism, such as kind of, sort of, a little, a bit, maybe, and slightly. Another type of downgrader is a deliberate understatement, such as “We are not quite there yet” when you really mean “This is nowhere close to complete.” The British are masters at it.
Nanette Ripmeester, Director of Expertise in Labour Mobility, elaborates on her experiences with the differences in use of language in her LinkedIn article “We all speak English, don’t we?”:
It took a while before I fully understood the British concept of phrases such as “very interesting indeed”. I once tried to use the “very interesting” in an international meeting: my Dutch and German colleagues looked at me as if I had gone nuts − thinking the suggestion was not ‘interesting’ at all and the Australians were puzzled, the Canadians doubted my intentions and only the Brits got my underlying cynicism. So, I now stick to the Dutch directness if I want to get my point across − often introduced by the comment “sorry I’m Dutch, so this may come across as a little direct …”.
In summary, the infinite permutations of culture can make creating a common language of resilience challenging for even the most experienced change leaders. Beginning with a North Star can help you communicate the design of your initiative and how it furthers better business and customer outcomes. Considering how national cultures influence work and communication styles can help you build trust across complex global ecosystems. Product- and service-line qualities can make a dramatic impact on risk appetite and tolerance. Clearly articulating the benefits as they relate to your stakeholder can allow you to build traction quickly. Even when using a common language, consider the nuances in use of language in different cultures to avoid misinterpretation on the receiving end of the message.
The journey to resilient operations
Whether you are just getting started or are well into your resilience transformation program, technology can be an essential tool in making your plans actionable and scalable.
Contact us to learn more about how Fusion can help you build a more resilient global financial services operation or check out our most recent product showcase which highlights how Fusion’s purpose-built operational resilience framework can help you build a more risk-aware and resilient enterprise.
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I couldn’t be more grateful for our panel of global financial services thought leaders and the Fusion executive operational resilience community for sharing their insights in cultivating risk-aware and resilient operations.
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About the Author: Paula Fontana is the Senior Director of Product Marketing for Fusion Risk Management.