How much value do you add to your telco? Are you worth a half percent of revenues? Perhaps one percent, or two percent? If that is how your contribution is valued, then you are heading for trouble. This year you may have delivered benefits equivalent to two percent of revenues, but what happens when the CFO sets you a stretch target of two-and-a-half percent for next year? How are you supposed to do that, if you fixed the root causes of the leakages that contributed to last year’s totals?
If your job involves promoting the upside to fraud management or revenue assurance, then I think you are in the wrong job. You should become a salesman instead. Go sell the company’s products and services to external customers. There is no theoretical upper limit to the value that a salesman can add to the business, and salesmen succeed by being upbeat and optimistic. The psychology of a salesman is the opposite of the psychology of a good risk/assurance professional. We need the risk managers and assurance professionals to be downbeat, analytical, serious, and conservative. And that is why accentuating the positives we deliver is the wrong approach for us.
Think of it this way: when somebody sells you life assurance, do they have a big smile on their face? A business is trying to persuade you to buy a burglar alarm – does it try to get you to imagine how happy you will feel because you returned home to see all your possessions are still there? The government wants you to quit smoking, so they run a public information campaign. Do they show you pictures of healthy people laughing and running? Or do they show you pictures of miserable people lying in a hospital bed, coughing and dying of cancer? Some propositions are sold by emphasizing your fear of loss. They urge you to protect your loved ones, your possessions, your health. The goal is not to be better off than you are already, but to avoid being worse off than you are. Risk avoidance is emotionally powerful, even though the emotions are negative.
We need to switch from emphasizing the benefits of what we are doing to talking about the fear of losing what the business considers valuable. Our bosses should be afraid of life without us. Ironically, that means accepting our conventional use of language is wrong. What we usually call a ‘loss’ – a narrowly-defined financial concept – is not perceived as a loss in any emotional sense. This is because the business was already willing to ‘lose’ a few percent of revenues, and nobody feels a sense of loss over something they never had in the first place. However, there are other things the business can lose, and this will provoke more fear. We can fear losing our existing customers, losing our reputation, or losing the value that every investor cares about because it is measured by the company’s share price. These fears are our friends, because they will motivate investment that seeks to protect the business.
In my presentation to this year’s WeDo User Group meeting in Lisbon, I talked about the psychology of risk-based decision making and how we might turn fear into an argument for more investment in risk management and assurance. Click on the video to watch my talk, and the slide pack is beneath.