Risk is one of the most difficult subjects for a management and board to discuss, yet it is arguably the most essential. Unforeseen threats to reputation and business franchise can overrun even the most dynamic business plan. And the financial meltdown showed us that the largest risks can lie in plain sight, but almost no one sees them. How can a company identify its hidden risks?
One technique that has proven exceptionally effective at bringing the hidden into the open is the Socratic Dialogue.
Many companies defend themselves by hiring risk managers and consultants. Their contributions are often productive. But, as in most of life's important matters, a company's first line of defense is itself. Management and the Board must take direct responsibility for identifying the risks to their own survival.
Most management team members carry with them informed insights on threats to the company's business. But, in many companies, the discussion of such threats grates against an entrepreneurial culture founded on positive thinking. The entrepreneurial outlook is essential, of course, but a corporate culture should also accommodate the convention of probing for risk. A sense that expressing doubts can be unhealthy for one's career also may inhibit frank discussion. But in the end, reasons for silence don't matter: The failure to pursue an objective exploration of a company's risk is, itself, a risk.
The Socratic Dialogue makes it possible to engage a group of key company managers, or executives from diverse organizations, in an open discussion of risks to reputation and franchise. The power of the Socratic form allows participants to access perceptions they may already have, but which have remained unexpressed because they lie outside the customary content of corporate discussion. The dialogue brings
these insights to light through participants' interactions with each other, the gentle prompting of the moderator, and the uncommonly open nature of the conversation.
The function of the moderator is to set the stage for a discussion of the full dimensions of the subject, though not necessarily to present them all at once. He opens the event by defining the subject. And then he asks a question—either of the group or an individual. Through the discussion, he refers participants to the statements of others. He suggests variations of the problem. He prods the group to create sharper
distinctions and move to ever greater levels of mastery of the question.
Participants leave the dialogue not only with a more highly evolved notion of the risks they face, but with an enlightened view of how productive dialogue might continue to take place in the absence of a moderator. When participants in the dialogue come from different companies, each receives the benefit of hearing how others have faced challenges to risk and reputation—and how they create solutions. Regardless of whether participants are colleagues in a single company, or represent many, they leave with a vastly expanded view of the control they hold over their own destiny.