Risk Appetite Vs Reform Appetite

Is ‘risk appetite’ the same as ‘reform appetite’? I think that they are related but not exactly the same thing!

Setting the risk appetite is a key responsibility for the PHN’s Board and is a central plank of good corporate governance, as we all know.  However, setting the reform appetite is not something covered in the Board Director training manual.

A person’s reform appetite is something deeply personal.  I suspect that it transcends the construct of  corporate fiduciary responsibility, although I am sure that some would disagree.

My experience tells me that our personal health reform appetite is shaped by:

  • Our personal health status and that of our loved ones
  • Our own experiences with the healthcare system
  • Our professional background and its corresponding worldview and interests
  • Our beliefs about things like universality of access  e.g. the value we attach to Medicare
  • Our previous experiences with change and reform
  • Our preparedness to suffer criticism from those likely to resist change – and this may be our peers and friendship groups

This means that our attitude toward health reform is always personal and invokes a predictably emotional response.

The trick of course is to translate the individual views about health reform to the collective position required so that clarity as to the Board’s “reform appetite” can be communicated effectively to management and staff.

Without clarity as to the PHN’s reform appetite staff are prone to either over-reach or under-reach!  I have seen instances where commissioners have been “sent back to the drawing board’ after miscalculating their Board’s willingness to lead out difficult change.

Thought starters:

  1. How well do you think you know your PHN’s ‘reform appetite’?
  2. How might you go about communicating the organisation’s ‘reform appetite’ to  staff?
  3. What kind of corporate risks accrue when a Board cannot articulate its ‘reform appetite’?