Risk management and relationship building go hand in hand

By David J. Moore, Chairman, Dove Nest Group

At first sight, there is little energy or enthusiasm to link a firm’s risk management agenda to that of building relationships with clients. Indeed, the two activities will usually be dealt with by different departments. The skills associated with relationship building may come from HR or the firm’s learning and development department. Overall responsibility for risk management, however, typically rests within a discreet function of the business.

Although this silo thinking can often occur in professional services firms, the synergy of joining the two approaches can pay enormous dividends. Both clients and law firms can gain from a better integration of risk management and relationship building. Clients will receive faster, bolder (at first sight) and more valuable advice, while firms will appear prepared to take more risks (without actually exposing themselves to any increase).

The deeper a firm’s knowledge of a client’s business, history, capabilities and ambitions, the more trust it can have in giving a view rather than protected options.

For a firm to manage risk at a transactional level, it must take far more precautions due to the lack of background knowledge. However, when individual partners or the client engagement team has a deep working relationship with a client, they are better able to offer insights and advice without appearing to go through all of the necessary preliminaries.

Although such insights may seem to be intuitive, the individuals concerned will be reassured that they are based on all the knowledge and experience gained about the company’s business and needs. Intuition, after all, is a subconscious shortcut from deep-seated knowledge '¨to action.

Skills and behaviours

Given the required skills, the key principle underlying successful implementation is the desire to build and maintain strong multilayer relationships with client companies. This should start from the very first engagement with the client.

The required behaviours will be natural for some individuals but less comfortable for others. For that reason, members of a client engagement team should be chosen not simply for their technical skills or specialist knowledge, but for their interpersonal skills.

Figure 1 shows the hierarchy and interaction between risk management and relationship building. The left of the diagram represents a transactional style of working. It’s almost inevitable that the first engagement any firm has with a client will be transactional but, even at this stage, the engagement team members should be prepared to invest time in building rapport and learning more about both the client and his business.

The goal is to be working at the right hand side of the diagram, but this is only possible after the firm has earned the trust of the client, having demonstrated credibility through effective analysis and interpretation.

The concept of building effective relationships seems less than comfortable to many directors and even partners. Perhaps it’s because they do not regard themselves as salespeople. If instead you create a culture of winning work rather than selling, some of the internal barriers may disappear.

While building rapport and demonstrating interest in the client’s business may seem straightforward, sincerity is a crucial factor.

The final key to success lies in building trust between departments and sharing knowledge inside the firm.

 

dave.moore@dovenest.co.uk