Agile in Risk


During two last episodes of Agile Mondays, together with John Mark Williams (CEO at Agile Business Consortium, UK) and Maria Cenusa (Innovation & Change Consultant at Integrated Consulting Group, Romania), we were discussing the topic of Agile in Risk. In this article, you can find the main bullet points and thoughts of the discussion and the videos of the full talks.

Place of Risks Department in Agile Structure

Where should the Risk Department stay – inside or outside the delivery team? Very often, Risks Departments are excluded from the Agile structure by default because it’s considered that agile is more relevant to the business. But as we discussed earlier – if an organization wants to become agile that the whole organization needs to become agile, and the Risk department is not an exception.
Here are some of the main points:

  • The challenge of agility for Risks teams. Banks take a methodological approach to Risks because of the requirements, regulatory framework, and necessary compliance. And yet, agility, by definition, is the power to adapt and respond to change. And if the change in the marketplace that addresses the bank moves faster then the regulatory framework, the challenge of the Risk teams in the bank is keeping up. 
  • The following philosophy fits the Agile way of working is that Risk is everybody in the bank, not only Risk Teams are responsible for risks, but everybody in the bank. And agile teams themselves are adopting the responsibility for ensuring that they comply with the risk structures within the bank.
  • How Risk Teams interface Agile projects within the bank has to embedded in the idea that everybody in the agile project understands risks from the banking perspective and thinks about the risks in everything that they do. One of the solutions to that could be is having a Risk-Business Partner in any Agile project team
  • The other important thing to mention here is the cost of control. The cost of control to the point of perfection is enormous. Once we get beyond 70-80% of perfection, diminishing returns very quickly. So, when a bank comes closer to the perfect cost of control, start to become less efficient and less effective and be less competitive as a result. Understanding and implementation of the agility in the bank make it more competitive than other banks. 
  • Time-to-Market is vital; it’s a vital element of competitiveness. However, in the end, the most important challenge for the bank is Time-to-Profit (TTP) is even more important. And this is where Risks should be involved. Because, partly, from one side, TTP is compliance or regulatory issue, and from the other hand, in SME segment – there is also a market risk, because SMEs are highly labor-intensive, they take much more time and efforts to get a return, and there are huge commitment and effort from the bank to service SME segment. And SMEs’ attitude to Risks is a crucial element of that market risk.

Watch the full episode below to learn more about Agile in Risks.

How to manage Risks in the project

The delivery of business value rapidly and often is the only way to mitigate risks because you want to get the customer’s feedback immediately.

If to describe the main principles of Risk Management in Agile Projects in a nutshell, the bullet points would be:

  • The short development period and quick delivery of the product aims to reduce risks.
  • Testing is part of the development cycle, which reduces risks at the early stage.
  • High responsiveness to changes.
  • Most frameworks do not prescribe risk management processes and techniques, which requires the project team to select and adapt adequate measures.

How SMEs are dealing with risks

Accepting that this is a big generalization, there are essentially two types of SMEs – Growth-focused and Lifestyle.

  • For Growth focused SMEs, risk reduces as their company grows, and that continues as an attitude throughout their life cycle.
  • For Lifestyle SMEs, they reach a point where they have a beautiful house, nice car, two good holidays a year, children in a good school, and all is nice. After that, they will take no action that risks that equilibrium. That includes avoiding Growth if Growth involves risking capital or revenue.
  • So, SME bankers need to get inside the mind of their target SME clients to see if they are Lifestyle or Growth focused – because Lifestyle SMEs will actively want to stop growing when they reach their comfort zone.
  • Risk Teams in the bank should familiarize themselves with the attitude of SMEs to Risk because this is a crucial element of market risk the bank faces.

To learn more, watch the full episode from May 04, during which we discussed it in detail, and join us next Monday on the Agile in Marketing topic.