A case of introducing dialogic strategic risk management

Our research is informed by the notion that accounting and accountability contributes to the construction of practices (and society). The idea behind the research is to construct purposively a new practice by a collaborative... [ view full abstract ]

Our research is informed by the notion that accounting and accountability contributes to the construction of practices (and society). The idea behind the research is to construct purposively a new practice by a collaborative effort of practitioners and researchers. So, the research object is to support professionals in changing their practice of risk management, while investigating this change simultaneously. We designed an action research case study in the city of Delft.

The city of Delft is a mid-size town in the western part of The Netherlands, between Rotterdam and The Hague, with just above 100.000 inhabitants. At the start of the case study the media covered time and money overruns of a large-scale project to tunnel the railway track in the city center. As a consequence, the city was subjected to budget cuts and intensive provincial financial supervision. Therefore, the city manager and the city controller intended to strengthen their steering of the large railway project and the practice of risk management in general within the municipal organization. However, they were aware of the critique to the type of risk management focusing only on listing risks and measures for accountability and legitimacy (Power 2004, 2009).

Based on the notion of interactive control system (Simons 1995), the risk management as a talking cure (Holt 2004), and the new risk management framework (Kaplan & Mikes 2012), we introduced a vision of Dialogic or Strategic Risk Management to the municipal organization. The contours of this Dialogic/Strategic Risk Management consists of providing containment to safely discuss strategic uncertainties, analyzing and discussing risks up to the highest level of the organization, thereby influencing the ‘tone at the top’, increasing the awareness of risks, and increasing appreciation of calling attention to risks or potential errors.

Together with a group of eight civil servants from the municipality, we perform a collaborative action research project, Change Lab Strategic Risk Management, to change the original practice of risk management towards more interaction and dialogue within the organization. Our research question is: How can a dialogic practice be introduced to the practice of risk management to influence the strategy effectively? For a period of two years the group and the researcher were actively experimenting dialogic risk management within the organization supported by the director (city manager).

To evaluate the Change Lab the researcher interviewed 22 persons, ranging from those completely involved to individuals who hardly noticed the Change Lab project at all. We report on the change within the risk management practice as noticed by all being interviewed. We discuss the contribution to this change by the Change Lab and by other factors, such as an investigation into large projects which happened to be instigated by the city council during the research phase. We describe the change as a change of orientation and relation (Shotter, 2010), and, therefore, as network effect and try to identify the factors within the action research project which contributed notably to the change.