Ignoring risk is folly, especially when the downside could be complete ruin for a business or investment portfolio. That’s why it’s essential for risk managers to persuade others to pay close attention to things that go bump in the night and then figure out a way to prevent loss, to the extent possible. Unfortunately, risk management is often seen as dull, overly complex or unlikely to be a path to career advancement. I know this firsthand. Having worked in various corporate settings, risk managers have few fans. They are the people who say “no” or ask others to gather data and documents instead of doing the kind of glamorous work that adds to one’s bottom line. Risk management is a thankless task until it isn’t. When the stars align, no one cares about managing uncertainty. It’s the “oops” moments that remind the world why taming risk before disaster occurs is a big deal.
For frustrated risk managers, there is hope, especially if you are willing to tweak your communication skills in pursuit of a worthy cause. Don’t take my word. Check out what Scott Adams Says.
According to the creator of the successful Dilbert cartoon strip and author of bestselling books such as How to Fail at Almost Everything and Still Win Big, simplicity is a core element of convincing others. In his recent video about doing laundry, I laughed out loud when he explained how he avoids the risk of discoloration. Buy clothes that don’t have to be washed separately. It’s such a basic and obvious solution that one wonders why it’s not more commonplace. (As I write this post, I’m wearing yoga pants and a sweatshirt with spots from something else I mistakenly cleaned in the same load.)
In one of Adam’s many insightful essays, the reader learns that another persuasion technique involves the use of visuals, especially those that appeal to people’s emotions. In investment land, think about the photos of senior citizens who lost retirement money in 2008 juxtaposed next to images of wealthy bankers with cigars and fancy cars. Regardless of case-specific facts, such powerful images scream “good” versus “bad.” It’s no surprise that financial service ads tend to focus on comforting images whereas political commercials show pictures likely to rile voters.
Yet another tool in the persuasion toolbox is what Adams describes as the “high ground maneuver” or the art of advancing an argument to a level that garners widespread agreement, thereby trivializing any other position. For fiduciaries being sued over their management of other people’s money, they might silence critics by demonstrating (if they can) how their risk management actions broadly advantage beneficiaries such as retirees or endowment recipients. The goal would be convincing others to overlook short-term strategy misdirection in pursuit of a lofty and prudent long-term focus.
When it comes to risk management, it’s not just about numbers. Rallying others to do their part is critical. One has to be an effective cheerleader to grapple with the unknown. I’m convinced that this persuasion “thing” has legs. That’s why I’ve just pre-ordered Win Bigly by Scott Adams for a dose of wisdom and a few chuckles.