Fintechs need innovation, new ideas, and maximum recurring revenue growth on dollars invested. They, therefore, attract entrepreneurs, free thinkers, and ideas people. Their vision needs to be on outcomes and success. These are key to a fintech’s success. But there is one thing missing – risk management.
‘No’, I hear you say, ‘but risk management slows us down. Risk managers are the fun police, the business prevention unit, the stoppers!' If that’s your view, read on, because I love risk and I love risk management and yet I like to think I am none of the above.
A number of years back, I took up the sport of hang gliding. Why? Because I love the reward of taking a physical risk – adrenalin, and not to mention the serenity of floating around at 10,000 feet. Hang gliding is an inherently very risky sport: the reward is great, but the inherent risk is very high. I wanted to take these risks for the reward, yet I did not want to die while doing it. Enter risk management and controls. I created a 44-point checklist that contained 44 key controls. I carried out my risk management and controls management before every single flight which took me around 20 minutes. During this time many of my fellow pilots were already flying – they had no time for this risk management stuff. Sadly, some of those people are no longer with us, but I am still here!
The pursuit of rewards and outcomes is wonderful, as long as it is sustainable. The pursuit of reward without risk management is ‘boom/bust’. Our aim should be a sustainable reward. We need to take risks in fintechs – that is where reward and success come from – but we also want to be around in 10, 20, and 30 years.
Risk management and reward management should be best friends, not enemies. They are not mutually exclusive and should be considered equals from day one of your fintech. Perhaps if the voices of risk and reward were equally listened to, and invested in, by Silicon Valley Bank, they might still be around.
So how do you ensure your risk management is an enabler of sustainable reward and invested in from day one? Ask five simple questions and see where your answers sit.
I may be called a ‘risk manager’ but I see myself as a ‘risk/reward manager’. You should not manage reward separate from risk or risk separate from reward – they are partners. I sometimes feel a good risk manager is a marriage guidance counsellor, where the partners are risk and reward. A sustainable marriage requires equal input by both partners and both being listened to equally.
Are you balancing the voices of risk and reward or favouring reward over risk? If you want long-term success and financial sustainability of your fintech:
To find out more about effectively managing risk and reward in your organisation, visit us at www.protechtgroup.com or email us at sales@protechtgroup.com
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