Jade Nikolaou is the global head of people operations at SecondMuse.
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I want to share a very different point of view than most and bring forward something that could spark conversation around diversity, equity and inclusion. One of the things I find shocking—almost to the point of embarrassment for being so closed-minded about this—is that enterprise risk management (ERM) or risk management (RM) can contribute greatly to the efforts of diversity, equity and inclusion (DEI) within organizations. Conversely, DEI can and does help manage risk within organizations, and ERM should aim to incorporate strategies through a DEI lens.
My previous cynicism with ERM stemmed from the fact that I didn’t actually understand the most fundamental principle, which Norman Marks in World-Class Risk Management and John R.S. Fraser and Betty Simkins in Enterprise Risk Management: Today’s Leading Research and Best Practices for Tomorrow’s Executives repeatedly state and elevate throughout their works: ERM is everyone’s responsibility.
What I find important about this is that it charges everyone within an organization to look beyond their scope of work and recognize that their decisions can impact the organization in one way or another. ERM is not just a “nice to have” but rather necessary for organizations to make the most informed decisions. I would argue that DEI is one of the greatest contributors to achieving many objectives within organizations, including world-class risk management.
Further, DEI is just as imposing as risk management as it relates to being a part of everyone’s job. Solving for DEI requires examining policies, processes, systems and culture—or, put simply, the building blocks of an organization. If these are the building blocks and people are the cement, we see that every part is connected in keeping things stable. Or in other words: DEI is everyone’s responsibility.
I think it’s widely accepted that humans are biased by nature. To charge one person with managing ERM runs the risk that their intrinsic bias will permeate the objectivity of their role. To that extent, the nature of bias supports the need for multiple viewpoints and stakeholders to ensure—to the best of their ability—that bias is alleviated and that a decision can be made one way or another based on the risk factors surrounding said bias. I would further argue that there are several kinds of bias that can show up in the workplace, and one that typically gets overlooked is process bias (i.e., onboarding, recruiting, marketing and messaging, and risk management). Beyond processes, leveraging assessments and DEI audits across organizations can help to identify and course-correct where risky behaviors may show up within an organization.
When all voices in the room are included, heard and understood in an equitable and equal fashion (thus bringing forward all vantage points), your team can then deduce what the best decision is to achieve the organization's objectives.
Rather than viewing DEI as a “nice to have,” saved for optimal circumstances, creating a framework where DEI is integrated into each decision is essential in good decision-making, and in essence critical for effective enterprise risk management. In an Entrepreneur article, Torin Ellis, a diversity strategist and public speaker, explained, “The tendency to retreat, minimize attention, shift efforts and restrict resources out of fear and scarcity is often the norm. My hope is that leaders approach [DEI] the way that activist investors approach decision-making.”
Framing DEI as being integral in decision-making can support an organization’s risk culture, which can be broken down into three parts: attitude, behavior and culture. Again, strong risk culture is every employee's responsibility in the organization.
If organizations can consistently analyze risk with an added lens of DEI, which would include hiring diversely for various positions to mitigate the risk of exclusion, they would likely have greater diversity at all levels. DEI, therefore, can contribute to a positive risk culture and be a driving force in organizations fostering world-class risk management.
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