Leadership and Competence: The Cornerstones of Effective Risk Management

Since starting my journey in risk management in 2018, one lesson has consistently stood out: frameworks, tools, and policies alone are never enough. The true differentiator between organizations that merely comply with risk procedures and those that genuinely manage risk well is the quality of leadership and the competence of those in charge.

Effective risk management starts at the top. Leaders who actively engage in risk discussions send a powerful message: that risk is not just a technical issue, but a strategic one. When executives ask the right questions, challenge assumptions, and support transparent reporting, they create an environment where risks are surfaced early and addressed collaboratively, rather than hidden until they become crises.

Competent leaders also understand that managing risk is not about avoiding all uncertainty, but about making informed decisions. They balance risk and opportunity, guided by data, experience, and sound judgment. In my experience, leaders who invest time in understanding key risks—financial, operational, safety, regulatory, and reputational—are better equipped to steer their organizations through volatility and change.

Another critical aspect of leadership in risk management is consistency. Employees quickly notice when risk policies are treated as formalities rather than real commitments. When leaders consistently follow through on controls, corrective actions, and accountability, risk management becomes part of everyday behavior, not just an item on an audit checklist.

Equally important is the competence to develop people. Strong leaders do not centralize risk knowledge; they build risk awareness at every level. They support training, encourage cross-functional collaboration, and empower teams to speak up when something does not feel right. Psychological safety, in many cases, is just as important as technical expertise in preventing major failures.

From a risk specialist’s perspective, the most mature organizations are not those with the thickest manuals, but those with leaders who are willing to listen, learn, and lead by example. They recognize that uncertainty is unavoidable, but poor preparation is not. By strengthening leadership capability and decision-making competence, organizations do more than reduce losses—they build resilience and long-term sustainability.

In today’s fast-changing business environment, risk management can no longer be delegated solely to specialists. It must be embedded in the leadership mindset and daily management practice. When leaders take ownership of risk, the entire organization moves from reactive problem-solving to proactive value protection and creation. And that, ultimately, is where true risk maturity begins.

By: Maya Rosa Nelsari Matondang, S.T., QRMP, Risk Management Specialist, PT. Sumberdaya Sewatama