Assessing Organizational Risk: Unveiling the Hidden Hazards of the Unknown

Last week, we explored how your organizational maturity determines your transformational readiness, and why greater organizational maturity directly correlates to greater odds for success with your transformational journey.

After assessing your organizational maturity, it is time to assess your organizational risk. Similar to a journey around the world, transformational initiatives are fraught with challenges, setbacks, and unforeseen circumstances – also known as risks. While it is impossible to predict and avoid every risk, there is great value in understanding the types of risks, their probability, and the impact they might have on your DX journey.

In this article, we will introduce the Organizational Risk Assessment, the two areas of organizational risk, and whether a risk assessment of this scale is even necessary for you to perform. If you’re ready to equip yourself to lead your team through the rocky path of the unknown, then buckle up and join us as we dive into the world of risk management.

What is an Organizational Risk Assessment?

Organizational risk assessment is a fundamental process in the sphere of risk management, aiming to systematically identify, analyze, and prioritize potential risks that could impede the achievement of an organization’s objectives. It is distinct from issues management, which deals with immediate problems requiring resolution. Risk, by its very nature, involves uncertainty and the potential for future negative impacts. Therefore, understanding and managing risk through thorough assessment is pivotal.

The approach to risk management encompasses two primary facets: risk assessment and risk control. During the risk assessment phase, organizations are tasked with identifying specific risks, analyzing their potential impact, and prioritizing them based on their severity and the likelihood of occurrence. This preparatory step is critical for laying the groundwork for effective risk mitigation strategies.

Following the assessment, risk control actions are implemented—these include measures aimed at reducing the number of identified risks, making contingency plans, and continuously monitoring the situation to adapt strategies as necessary. We will cover the aspects of risk control in a later article.

One of the primary objectives of conducting an organizational risk assessment lies in its ability to inform and optimize the change management process. This involves detailed planning across several dimensions:

• Training Plan: Outlining necessary training interventions to equip employees with the knowledge and skills needed for seamless adoption of the changes, ensuring desired performance improvements.

• Communication Plan: Developing a strategic communication approach to ensure all members directly and indirectly involved with the DX initiative – including all stakeholders – are informed, engaged, and supportive of the transformation.

• Sponsorship Involvement: Identifying and involving key personnel who will champion the change initiative, providing leadership and advocacy to drive success.

Is An Organizational Risk Assessment Necessary?

Despite its critical importance, organizational risk assessments are sometimes overlooked or avoided by businesses, under the misconception that they are time-consuming without offering proportional benefits. However, risks and issues will inevitably arise during the project lifecycle, and some may even prove to be catastrophic if not caught early enough. Leaders who have invested the time to be proactive in their risk assessment and risk control strategies are better equipped to mitigate the risks, diffuse issues, and lead their team to a successful finish, positively impacting the project’s timeline, budget, scope, and odds of success.

The amount of effort required to perform a risk assessment will depend on the depth and scope of the planned digital transformation project. The greater the changes being undertaken, the higher the stakes, and thus, the greater the need for a comprehensive risk assessment. If the project scores lower on the level of impact to the organization, there are inherently fewer risks and therefore an intensive organizational risk assessment may not be necessary in that instance. However, we recommend conducting at least a basic risk assessment to ensure major potential risks are not overlooked, as even small risks can have significant negative consequences in the long run.

Conducting the Organizational Risk Assessment

A formal organizational risk assessment should be performed by a change practitioner familiar with organizational change strategies and experienced in conducting and scoring employee surveys and interviews. There are myriad approaches to assessing organizational risk, but generally speaking the assessment examines 2 areas:

Organizational Change Attributes: This area will determine if your organization is change ready or change resistant.

Estimated Change Characteristics: This will give you a better understanding of the impact the change will have on your organization, whether it will be small and incremental or large and disruptive.

If you’d like to read more about conducting a risk assessment, Prosci is a great change management resource that offers training and licensing, research insights, workshops, and more.

If you’re interested in outsourcing this crucial step in your DX journey, contact Victoria Fide for a free consultation. Our experts regularly perform organizational risk assessments as part of our Proven Process for Transformational Change, and provide tailored recommendations based on change management best practices to equip you for transformational success.

---

Transformation is not easy, but it doesn’t have to be impossible. Take control of your project’s success today and schedule a free 30-minute consultation to find out how Victoria Fide can equip you for transformational success.

---

Assessing Past Change Management Experiences

The past is a mirror to the future. When we look to determine how successful the organization will be  in handling the current change, we begin by analyzing how well it handled past changes. By analyzing past experiences, you will be able to identify certain trends and patterns to be addressed in the change management plan. This context serves as the lens through which you will assess both the organizational change attributes and the estimated change characteristics. The dimensions of past changes to analyze are:

• Technology: What new technologies have you implemented in the past? What was the user adoption rate? Is it still being used today?
• Business structure: What new process changes or organizational changes have been made?
• Scope, Cost, Duration: What was the scope of the previous changes? How much did it cost, and how long did it last?
• Milestones/Critical activities: What are the milestones that must be met to achieve success?
• User experience: What has been the feedback to the user experience changes in past digital transformations?
• Externalities: What were the external forces at play during previous change initiatives? For instance, the economy, competitive market, etc.
• System complexity: How complex was the new system?
• Assumptions: What assumptions are held around the technology platforms, resources, process revisions, etc.?

Gaining a comprehensive perspective surrounding any past change initiatives will greatly inform your current OCM plan and risk mitigation strategy. You’ll not only deepen your grasp of your organization’s change strategy but also glean valuable lessons from past challenges you’ve faced. Organizational Change Management is not a one-and-done action item, but rather an incremental approach that will enable your organization to evolve and adapt to greater support your organization’s transformational journey well into the future.

Assessing Organizational Change Attributes

With the context in place regarding past change experience, it’s time to dive into the first area: Assessing Organizational Change Attributes. The goal of this stage is to discern if the organization is change ready or change resistant. You can do this by conducting employee interviews and surveys surrounding the following topics:

• How strongly do your employees believe change is necessary?
• How positively do your employees perceive past changes?
• How unified is your organization’s vision or direction?
• How adequate are the available resources and funds?
• How receptive are employees when it comes to new changes?
• How well are employees rewarded for taking risks?
• How much is the leadership style distributed vs. centralized?
• How competent is your middle management in managing change?
• How competent are your employees in managing change?

The answers to these questions will give you insights into not only how receptive your people are to change, but also why or why not. It will give you a better understanding of your organization’s culture, management health, and level of change resistance. This data will highlight risky patterns and behaviors, tenuous culture, and ultimately inform your Organizational Change Management (OCM) strategy so you can address the specific concerns directly.

Assessing Estimated Change Characteristics

The next area to examine is Estimated Change Characteristics. The answers to these questions will tell you if your planned transformational initiative will have small, incremental changes, or large, disruptive changes. Remember, the bigger the change, the bigger the risk. Make sure you have a clear understanding of the following:

• Scope: Is the scope of the change limited to a single work group or is it enterprise wide? Somewhere in between?
• Affected Employees: What percent of your employees will be affected by this change?
• Change Equality: If the change impacts multiple groups of employees across departments or divisions, will they be equally affected? Or will one group be required to take responsibility for the majority of the change?
• Processes: To what degree will the change affect your processes?
• Technology: To what degree will the change affect your technology and systems?
• Roles: To what degree will the change affect job roles? Will there be organizational restructuring? Changes to staffing?
• Overall Level: How would you and your employees rate the overall level of change? Is it incremental or radical change?
• Compensation: Will this change affect employee compensation? If so, how much?
• Time frame: What is the estimated time frame of the change? Less than a month? Multiple months? A year or more?

Once you’ve gathered the answers to these questions, you will have a good idea of whether the estimated change will be relatively small and incremental, or if it will be a radical, transformational change that will disrupt a great deal within the organization. Knowing the areas and people that will be affected – as well as how they will be affected – will greatly impact your OCM strategy throughout the project.

Next Steps: Navigating Organizational Risk with Confidence

Risk is no stranger when it comes to digital transformation (DX). While it is impossible to predict and plan for every possible scenario, a comprehensive risk assessment is fundamental to preparing you to navigate risks with confidence while you achieve DX success. This detailed review, focusing on your organization’s change attributes and change characteristics, provides insights from past change management experiences. This context equips you with the knowledge you need to construct a comprehensive change management plan, address the concerns of your employees, reduce change resistance, and mitigate risks effectively.

There are two broad areas of assessment:

• Organizational Change Attributes: Evaluating the culture, management’s competencies, and the level of change resistance within your organization.
• Estimated Change Characteristics: Understanding the scope, impact on employees, processes, technology, and the overall level of the proposed change.

Armed with the insights from employee perceptions, estimated change impacts, and lessons learned from past initiatives, you can craft a strategic Organizational Change Management (OCM) plan tailored to your specific context, culture, concerns, and change goals. This dynamic guide will inform decisions and proactively shape the change culture you want for your organization.

However, depending on the outcomes of your findings, you may discover that the organizational risk is larger than what you are willing or equipped to manage with your current state of organizational maturity and resources. You may consider pausing your transformation efforts, seeking external expertise from companies like Victoria Fide or other consulting firms, or focusing on increasing your organizational maturity before moving forward with your transformation.

For further guidance and to continue enhancing your approach to digital transformation, stay tuned for our next article, which will offer deeper insights and tactical steps to take the raw information you’ve gathered and forge it into actionable strategies that will propel you toward your organizational goals.

Take the first step today – review your organizational risk, assess your findings, and subscribe to receive weekly guides to equip you on your self-directed digital transformational journey.

• LinkedIn
• YouTube
• Mail