Episode 54 - Charles Tapp II
The Real Work of Enterprise Risk Management
Motivation N'at Podcast
Full Transcript
Natalie Bulger (00:01)
Charles Tapp and I both built enterprise risk management programs in our own sections of Veterans Affairs, bringing them together to pave a path that started to make meaningful change. That was prior to both of our departures. And today we're just two people talking honestly about the patience, stubbornness, and less than glamorous moments that it takes to dispel the fear around risk and reframe it as a lighted path to success. Those in leadership, you're going to want to stick around for this one.
Hey everyone, welcome back to another episode of Motivation N'at. I'm Natalie, your host, and this is where we take Hot Mess to High Potential. And today I'm really excited because I get to have a former federal colleague and probably one of my very first enterprise risk management role models joining today. we are both out of the federal government, so anything we say in reflection is just our past experiences and things of that nature but I know the listeners are gonna have a great time hearing from Charles, who I'll introduce in a second, because it is just so wonderful to have someone from a like a scientific financial risk space who actually is still real connected to life and how things work and not just talking credits and debits and all of those kind of things. So I think this will be an enlightening conversation and we're gonna touch on so much stuff.
So Let me introduce Charles very quickly and then he'll tell us a little bit more about himself. But Charles Tapp is the former Chief Financial Officer for Veterans Benefits Administration at the Department of Veterans Affairs and the current strategic business partner for Veterans Affairs Programs at Steerbridge. So not the same. Don't just assume because you hear VA, it's still VA, it's a it's relational. During his tenure at the VA, though, he managed $190 billion benefit portfolio.
Natalie Bulger (01:56)
Doubled his team size while improving culture and he steered his office to become one of the highest-rated workplaces in the agency. He's an Air Force veteran and believes that there is more to leadership than just a title, which is my favorite kind of thing that I found when I was digging up some bio stuff for you, Charles. So tell us a little bit about you, about what has kind of created the person that's sitting here today, that we'll hear from and some of the wonderful nuggets about you that folks might not know.
Charles S. Tapp II (02:24)
Well, first of all, thank you for having me. I'm certainly humbled that anyone would want to hear from this little old country fellow and talk about experiences in professionally, but I am certainly grateful and I don't take that for granted. So thank you for having me on today. And you know, for me, as I went throughout my career, you know, first as a military officer, by way of ROTC, United States Air Force ROTC, and eventually went to industry,
And spent some time at Booz Allen before coming to VA. And then finally, and then I s spent about 15 months at Gartner. and I absolutely love that experience. And then had the opportunity to come here to Steerbridge to oversee their V VA account. My life's goal, you know, even dating back to a very young second lieutenant, was to impact the lives of those around me so that I could help them meet their potential and grow them to be more than they think they could be. And I think that really stems back from the upbringing that my mom and dad provided for me and my brothers, my two younger brothers, but they told us even when we were young, one of the quotes I remember them sharing and still share to this day, he said, You can become anything you put your mind to. And you know, it sounds really cool and trite, but our parents were really intentional about sowing that seed into us.
And then to look back at the career I've been blessed to have, you know, those seeds they planted and certainly watered, you know, with love, care, with faith upbringing and certainly giving us exposure has really, you know, come to fruition. So super you know, appreciative of that. but literally again, the that's kind of the at least in my mind, the the core foundation of who I've tried to become and certainly try invest in the people along the way.
Natalie Bulger (04:19)
So I have to ask because I I find that when you ask like a teenager what are you gonna do, you know, for your life, they don't go, I'm gonna be a CFO. They might say, I wanna make money, and they align that with financial careers, right? certainly we have people that say, I wanna go into the military, I wanna serve. So how do those two things kind of connect? Because as much as we don't realize it, the military has all of these positions as a part of it. They have a healthcare arm, they have a finance component, they have a policy component. So walk us through a little bit of that from that ROTC piece to how it got you to this kind of, okay, I can run a whole financial arm of an organization.
Charles S. Tapp II (04:58)
So so crazy thing, like many kids, I can remember as a a a young teen, I wanted to grow up be a baseball player. 'cause in my mind, like I said, baseball was life. I did good did well financ or academically rather, but I wanted to be a baseball player. Well, I recognized once I got to high school, like, yeah, that's a fleeting dream. number one, I'm not growing tall fast enough. so that's gonna be a limiting in terms of just height and just physics in that respect.
So what I convinced myself of is I wanted to become a businessman. And a businessman in my mind was like my Uncle Tony, my dad's youngest brother. He's only twenty years older than us, so he's like a big brother. And he was truly a businessman where he he played college athletics at Howard University and football and tennis, interesting combination, but he was a running back in football and played tennis. But when he graduated, he went to Exxon or actually and eventually became Exxon Mobil. And truly he was a sales rep.
So in my mind, a businessman, he had a briefcase always full of peat mount nuts when you could actually get nuts on the plane. And he always he was the first person I knew who had a phone in the bag or a cell phone, but it was a phone in the bag back then. And he always drove cool rental cars. So that was my aspiration when I went to college to become a businessman. And the closest major to businessman, you know, as you start looking at Wikipedia, which didn't exist back then, was being an accountant. so I wanted to be an accountant.
But I never wanted to go into the military. Never, ever, ever. I can remember after high school graduation, my dad's godmother said, Babe, are you going to go into the military like your dad and your uncles? No, ma'am, I'm not. And literally three months later, as I went to the college campus of North Carolina AT State University, I did research over the summer and I said, You know what? In my mind I want to become a forensic accountant. that was the businessman version. Forensic accountant would be cool.
It'd be cool to be a forensic accountant in the FBI. How cool it to a nerd with a gun. And I made the decision, even to the surprise of my parents, that I said I was going to try out this Air Force ROTC thing. Because number one, I could get a full scholarship for school. I didn't I was the oldest of my three brothers or my brothers and two younger brothers. And I didn't want to have my parents have to worry about trying to pay for school. so I said I can do this Air Force ROTC thing for four years.
And the military experience will make it easy to transition to the Fi FBI, become a forensic accountant. So when we drove to campus, didn't tell my parents, walked into the ROTC building, said I want to sign up. And they were like, my God, what is happening here? And literally I signed up for Air Force ROTC on the spot. And that's what fueled in my you know entry into the military was no debt from my for my family, and it would be a pathway to being a forensic accountant.
Natalie Bulger (07:53)
Well, and tell us, did you ever end up in actual forensic accounting or
Charles S. Tapp II (07:57)
I did not. So, true story. I I could become on active duty in my first duty assignment at Alison Air Force Base in Fairbanks, Alaska, right outside of Fairbanks, Alaska. And I got there as a budget finance officer. So I'm in the field. And I said, okay, do this forensic accountant thing. I need to go see the Office of Special Investigations, the Air Force's version of FBI, and said, Hello, friends. I am here. I am Lieutenant Charles Tapp. I want to be a forensic accountant.
How do I come into the Air Force and investigate white-collar crime so I can transition to becoming a accountant after my four-year commitment? They were like, Lieutenant, you have to start off with regular investigations. I was like, what does that mean? They're like, you know, the nasty cases that you see on CSI sheet shows. I was like, I don't want to do that. I'm an accountant. I'm not, I ain't into the drugs and the killing and all the things. They were like, well, it's not quite that gruesome. That's TV. But I said, I don't want to do any of that.
I wanted to do accounting. So that killed the dream, because I'd have to go through that pathway, at least in the military to do it. So I said, Okay, I'll stick with being a finance budget officer and I'm gonna do three, four years and get out. And ten years later I was still in.
Natalie Bulger (09:09)
Best laid plans. it's funny, you probably don't know this about me, but my goal was actually to be an FBI profiler because the time the TV shows told me I could do that. And I said, I'm gonna go to University of Maryland because I'll be right next to the FBI and there'll be no reason why Quantico wouldn't take me. And it was the same thing I got. I had a dual degree I was getting ready to be done with, and they said, we don't we don't like psych and crime majors. Like we we want you to come in with like computer science and language, and we'll teach you the psych crime stuff and I'm like, so I just paid for an out of state degree that I'm it's not gonna mean anything, right? But this is the best tie-in in the world. I still love crime. I mean I'm that person. I watch it all. And when I interviewed at the VA the network director I interviewed with asked me what book I was reading and why it mattered. And here I am reading Under the Banner of Heaven, which is a gruesome crime novel about, you know, this serial killer in in Utah, this in the Mormon faith. And I was like, How in the world? I couldn't even grasp another book, right? Couldn't even pull it. And and I said, Well, you know, I wanted to, you know, be a profiler and I still really like investigating things. And so I read these books and I think you're works really well for compliance and risk when it comes down. And then you and I have met because I got hired off of I think that answer. And I ended up just creating this risk career at the VA, which is indeed a weird set of like digging and investigating and pulling things out and trying to determine what's the best course of action. So If people probably don't align how the heck risk and business or risk and money all connects together. when was the first time that you really tapped into, hey, this isn't just about what we spend and what we bring in, but there's an underlying set of information we should probably understand in order to make these debits and credits make sense.
Charles S. Tapp II (11:12)
Great question. So I'm gonna tell a a short story if I can from early on in my air air force career and then tie it to the more recent experience as CFO. So when I came on active duty, I was the first officer in my family. So all of my family, my dad, uncles, they were all enlisted and my uncles were actually NCOs, non commissioned officers. They said when you get to your first assignment,
You make sure you find some of the more senior non-commissioned officers, senior NCOs, and you seek their advice on how you can be a successful young lieutenant. So I went to saw this Chief Master Sergeant, E9, highest rank in the Air Force, who ran the mission support group. And I said to him, I said, Chief, my dad and my uncle said I need to come visit a person just like you and ask advice. So here's my advice or my question to you. What should I do?
As a young lieutenant, to really accelerate my career so that I can truly be the best young officer I can be. Sat back in his chair for a minute, then he moved forward. He said, Lieutenant, here's what you need to do. You need to understand that the Air Force is about flying first. Well, in my mind, I'm thinking, well, that's a stupid answer. I'm a budget finance officer, you know that. I just told you I'm hello, I'm Lieutenant Tap, I'm from the finance office. And you're gonna tell me about flying.
Man, that was a stupid answer. I just wasted my time coming to visit this man to get this insight. And he just wasted my time. But I said, because I'm polite and I grew up to have more respect. So, well, thank you there, Chief. I appreciate your insights. Would you mind if I come back from time to time and seek additional guidance? He said, Come back anytime, Lieutenant. Well, obviously, as my career continued to unfold, even in that first assignment, I realized that I was the one who was misguided, wet behind the ear, Lieutenant. I had
No a real appreciation for what he just told me. He said, literally he was saying, you have to appreciate what the power of money does to fly planes. Because the mission of our organization is to fly planes. It's the man, trained, and equipped, though the aircraft, so that we can drop bombs on target. So if you don't understand the core mission of what you do, the function or vocation that you bring to the table will never align with that ultimate mission said differently he says you have to understand the power of the money that you have oversight for. And that is to put bombs on target. That's the deal. Well speeding forward as I became the CFO, literally 25 years later, I took that mindset into that role. And it wasn't really about the money or the fact that I had oversight for, like you said, over 190 billion dollars. I learned it was about the power of what that money could do. And as I started thinking about risk, my job was to make sure that we, as we came up with risk mitigation strategies, it was really to say, how can I use the resources I have oversight to?
Put the right money in the right hands for the right outcomes at the right time so that we could serve the right people in the most right way. And those come about when you have to decide the mission that we inherited, particularly when it came to serving veterans, what are the risks or things that could go wrong in that space? And then how do I help drive the mitigation actions as the chief financial officer and the chief risk officer? How do we identify those risks?
Then help resource those risks that we could buy them down in terms of their likelihood of severity. So those were the things that I think were instructive. But it all can comes back to that young lieutenant moment when the chief said you have to understand what the core mission is and how you fit. And once you understand that, you can help really drive change where necessary, but certainly help improve the mission.
And identifying risk and helping to find mitigation strategies, usually in the case of me being CFO via money, was important to make sure that the core mission of VA moved forward so veterans could be served.
Natalie Bulger (15:26)
And it it makes so much sense when you tie it to a mission to then understand how we assess risk in our everyday life, right? My mission is to get to the grocery store to buy my groceries. I take risk by getting in the car and going a certain route. I put on a seatbelt in case I don't get, you know, injured if there would be a car wreck, which may be something I can't control as much of. But we are individually making mitigation decisions on a regular basis to the point where we don't even notice them until someone sits us down for a big purchase, like a houseware car, right? And you're like, risk of this car being a lemon and I won't get my money's worth, or this house and having warranties involved and all of that kind of stuff. But it has been, and you and I both went through this, a really hard.
Process to get people to think about risk over the over a kind of initiative or a plan, and especially to think about it in a positive light, which means that risk is worth it. And actually, if we do said things, there's a higher chance of success and a lower chance of failure. So think what are some of the ways that you found were most successful when you were trying to translate what the heck this risk conversation is to people that were just, let me do my job, let me get my performance done and get on with things.
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Charles S. Tapp II (16:50)
So so I have to be I have to admit and instead of a I would I can't say I was necessarily a risk savant where I could actually just translate all the things that people say, my God, we gotta have it. I had to cheat a little bit. So it's the CFO and being dual head as a CRO. People knew that if they wanted money, they had to at least endure my meeting. If not, they were gonna be poor. They recognize if I didn't pay attention to Charles, I may not be able to get my contract signed. And you are correct. but all kidding aside, aside from my mafia-like tendencies, one of the things that I emphasized with our team both our organic team that have responsibility for risk and our our industry partners, as far as the contractor we're working with, is that we have to make sure that we can answer the question every time we meet with these executives of why should I care about this risk thing that you're talking about? And why should I care meant that we were going to help them frame and shape what are the risks or things that would derail us from accomplishing our mission.
What were the mitigation strategies? And mitigation strategies in my mind fit into a handful of buckets of things we could do: policy changes, structural changes, procedural changes, or we needed resources of some sort. And those were the buckets that we tried to help frame as we said, hey, as you're building your risk, we're gonna help you identify which bucket your mitigation fit in and help support it through the lens of financial management.
Well, long story short, as we did that over a few years, we started by aligning risk to our unfunded requirements. And we said, hey, if you want your unfunded requirement prioritized to even get have the remote chance of getting money, you have to talk about how your ask for money mitigates a risk that you've identified. And they said, Well, Charles, if I can't, then what? I said, if you can't, I can't. They were like, What do mean? If you can't identify the risk you're mitigating, then I can't support.
Making a recommendation for funding. So if you can, I can't. So that they they they caught on really quick as far as a leadership team. And after we caught on really quick, we started integrating that approach for how we asked for money through the president's budget. And over the course of two or three years of doing this, we were able to garner several hundred thousand seven hundred million of dollars that we put against risk-informed budget decisions so that we could better serve veterans.
But was because we were intentional about aligning our risk to resources that were needed and then telling our story, both at the secretary level with OMB and eventually to the con the members of Congress so they could support our requests. But it was all about making risk-informed budget decisions.
Natalie Bulger (19:39)
Well, and I think that's the the storytelling part that you kind of lean on there, which is like, Well, what is the soup to nuts? This isn't just about, you know, again, preventing something, but it's because we did this, we were able to do, you know, one, two, three, which resulted in this for the veteran. And that goes back to your mission piece. Like, how does this help me fly the planes? How does this
Help me help a veteran. And the work that you did in this, what was a small scale in regards to the size of the team that you had, you know, caught the attention of my boss at the time. And she's like, so there's this thing at BBA that they're doing. And you know, I think since I was taking on more risk work at that point, she was like, You should probably start working with them and figuring something out. And I don't wanna we became a real thorn in the side of some folks that didn't necessarily wanna get with the program. Because we're like the two Veterans Health Administration and Veterans Benefits have such a huge portion of the responsibilities within VA as a whole that by saying this doesn't make sense to us, the historical way things have worked, and there's more to it than this, and we have to peel some extra layers back. And it doesn't matter if you've just done a couple of tasks. What the heck were those tasks meant to do in the first place?
And I think that was a weird pain point to be in because we had some folks above us that still were struggling to grasp this. We had a huge set of folks next to us and kind of under us in the structure that were struggling. And here we are in the middle of the sandwich going, guys.
Charles S. Tapp II (21:12)
Absolutely. And, and the big thing you just mentioned, and I think this was where it was a challenge. Historically, in many instances, people viewed again risk management and certainly the whole drill of creating a risk list as a compliance drill. Because what would happen is you create these lists and nothing would happen. And I do remember talking to those people who were at the apartment and saying, Hey, let me ask you a question. What are you doing with the risks that we provide to you? And more importantly, how are you using the risks that we are providing to you and from our admin to inform what the secretary uses as he's engaging with stakeholders that have the opportunity to invest, whether it be political capital or resources to aid VA move forward in our mission to serve veterans? And they would be silenced.
Or they couldn't have a very informed discussion with us on how the secretary was using the risk that we gave. And then we discovered that perhaps they weren't being shifted into the the in front of the secretary so that he could actually make decisions on these enterprise risks. Well, as you may well remember, that was very disappointing. So we had to start creating that space for ourselves. And the good thing is I owned the appropriation by which we served in and operationalized the secretary's vision.
So had a platform to leverage those enterprise level risks from the VBA's perspective to inform how we developed our president's budget that ultimately aligned with the vision the Secretary had for us delivering benefits and services to to veterans and their families.
Natalie Bulger (22:54)
Well, and with your experience that, you know, you've also been, you know, present in some of these places when unanticipated risks happened and had trickle down or adjacent ripple effects. I think COVID is the huge one that we all knew. We're like, that is what we call black swan in the risk world, where it is a huge severity, very low likelihood. But when the likelihood happens, the probability skyrockets and now your severity skyrockets. We see this in the military too. The military plans around a lot of this, right? The we the invasion
That we never may anticipate, or you know, you know, we see it in energy with you know failures of massive systems. And it so we can't there would have been nothing nothing necessarily that would have been a value-based decision to prevent COVID from starting, in regards to, you know, we don't lock down every single virus that's ever been potentially created. But what did you see? How did that change and how have those instances shifted the risk conversation? So folks that don't
don't understand or haven't been taught tolerance and appetite, those are huge triggers and pushes that do make it very different. And one day we may have had one opinion and the next with this incident be in between, we have a very different outlook. What has that been like?
Charles S. Tapp II (23:59)
Yeah.
So the biggest thing that the the biggest gift that we received from COVID was what you just, you know, touched on. It was the opportunity to say, holy smokes, those black swans can't occur. Cause before they're very theoretical. And if not, even some folks would consider them fictitious in terms of the opportunities for them to occur, or the likelihood of them occurring rather. And now when COVID hits and now we've gone from, you know,
There's some sniffles and coughs and fevers to three and four years of working remotely and the impacts that had on the broader society. Now people are certainly more open to the discussion of what ifs. And really when you start thinking about, you know, risk identification and and certainly risk mitigation, it's really the identifying the what is what can happen that could be catastrophic to what we're trying to accomplish.
Those are now not as far fetched as they once were. And people realize they really have to give it some thought, particularly as we still continue to watch technology continue to advance and and you know and the advancements of AI and the advancements in terms of computing power and just how things are changing in the environment in terms of no kidding, you know, from the global warming, and you start looking at those con, you know, concerns.
all those things now open the door for more what-ifs. And because we've experienced, you know, the black swan of COVID, it now allows us to be able to exercise those muscles that will allow us to be a lot more responsive to those risks. But the first step in being responsive is really developing plans and understanding what's in the realm of what could happen so that you can start thinking about them and you're not caught flat footed.
In terms of response.
Natalie Bulger (26:05)
What's message that you would give leaders? So let's say it's the CEO or the COO, right? And we come in the room and we start asking what if? And someone who a lot of folks get defensive with that because it's kind of this, well, why are you asking if we would fail and what would happen? Like we don't want to talk about the failure chance or anything. How do we or or what's the advice to folks when those questions are asked to stay, I don't want to say a little bit of neutral? Like it's a fact gathering process and you know, evidence.
evidence collecting and you know we don't want to label that that we may actually illuminate something really opportunistic through those questions. So how should we think about that when we're in those rooms and s our initial reaction is like a stop questioning me kind of thing.
Charles S. Tapp II (26:42)
Yeah. Yeah.
Yeah.
So I'll I'll use another example of a story of how this is very instructive. So we created our first risk register and it was top 20 of of things that could go wrong or were going wrong or we saw pain points in the veteran benefits administration. And the bottom three or four was HR. and and everybody says, Yeah, HR is a thing and getting people is thing, but you know, it didn't rise to the level of actually producing.
benefits for veterans. Okay, fair enough. Well, as we did our risk register a year later and we started seeing all the initiatives that were coming forward. Now based on the voting schema that we use across the executives, HR moved to the top four. And it would have never risen to that level of prominence had we not adopted a more informed risk posture.
To ask, what are the things that are limiting our success? Or what are the things that if if another piece of legislation hit, what thing would prevent us from being able to do it? And it wasn't the ability to find people, it was the pipeline by which to ingest those people quickly in order for them to tackle that new legislation. Well, we were on the cusp at that moment in time of the PACT Act.
And because we had rated HR, because we saw the PACT Act coming, because obviously the PACT Act was a couple of years in the making, but it started getting more fine-tuned in the spring of 2022. Because I think it passed in August of 2022. And by the time we got there, again, HR was in the top four. Well, when Congress appropriated the $500 million of startup funds, VBA was successful in garnering $302 million of that.
We put many millions of dollars right off the top against HR. Why? Because we could show that it was a risk-informed budget decision and how we could buy down the risks that we saw. We were postured. It wasn't we had to get ready for it because it was a part of our mitigation strategy on what to do in terms of hiring contracts.
training that was necessary in the HR space when that money showed up because we aligned it to our risk and mitigation approach, when that money hit, we were able to execute, not think about executing or trying to figure it out. So what I would tell those back to your earlier question in terms of those leaders, I'd say, hey, as you start thinking about the success you want in your organization three to five years out, or more importantly, the threats that could derail your organization both today and tomorrow.
You've got to commit the time to identify those. So if the opportunity comes, you're not thinking about getting ready, but you're already ready to execute because you have those mitigation strategies. You've already invested some thinking into them. And that's the thing I think that's most important is to be ready for when those catastrophic events occur. Because the time you lose getting ready means that more harm could be being done. And in the case of these veterans, when Pac DAC dropped,
We were able to get in and start processing claims very quickly. That meant more veterans got served. That meant more families that were hurting got relief. That meant veterans who may have needed these finances to avoid suicidal ideation got the help that they needed, both in their diagnosis being aligned to their rating, as well as their financial resources that come with it, once they are rated, because we had taken the time in a risk environment.
to create the risk and mitigation and we're ready to operationalize it once the resources showed up. So sorry for the long answer. My hope is that again, the real world example, you know, gave some teeth to the theoretical response.
Natalie Bulger (30:46)
Yeah.
No, because and I think you and I know this and hopefully folks listening are are starting to hear this, that the right time for the risk conversations is as early as you can get it. And often in those strategic planning discussions, when you're doing SWOT analysis, which is literally risk analysis in some fashion. And ironically for us, what we often hear it is once someone's been called in front of Congress and the the Senator or the or the rep is saying, What was your risk mitigation? What was your risk assessment of this? And they go, I don't know.
And so you don't want to have to be answering that after the fact to determine I didn't even know this was a black swan because we didn't even attempt
Charles S. Tapp II (31:22)
Yeah, so true.
Natalie Bulger (31:33)
To categorize it in some fashion or at least rack and stack it. And what I always found was one of the really beneficial things about risk analysis, and you can do it with the most simple approach. You don't have to be an expert. Everyone listening could take this back. Is when everyone wants to tell you the house is on fire or will be on fire tomorrow, that can't, that's not reality. Like the we all have things that we think are matches, but when we start to look at them, you see how far away some of the matches really are.
are. And so this idea of, well, what do you mean when you say it's critical? Well, what do you mean when you say financially catastrophic? Does it mean a million dollars of loss or more? Or, you know, for you, and this is what I want to get on, like when we think of enterprise, because you and I were at an enterprise level.
There are people who are in small groups and they go, Well, my enterprise is fifty people and a, you know, five hundred thousand dollar budget. So anything is enterprise to me. And it's like, but you are also a small drop of water in a large ocean. And so
Enterprise really is the viewpoint in which a lot of folks look through it versus an idea of overall strategic risk. What were some of those instances that you ran into and you had to do a little bit of like education on, yeah, I'm not trying to tell you this isn't this isn't important to you, but
Charles S. Tapp II (32:53)
Right. No,
that's a good point. So I always say what you see depends on where you sit. So to the point you just made, if I'm sitting in a small organization, my enterprise is very small and tight. And even if I have a laundry list of fifty risks, even in that small instance, I've got to say, what are my top ten risks? What are the things that rise to the top that could compromise the ability for our organization to function?
Take that same mindset and elevate that to the highest level of your organization. It's the same thing. What are the things, particularly at a large federal agency at the highest levels, that generally would, you know, compromise the core mission by which you're funded from Congress, the core capability that you must have in order to serve the general public in terms of what they look to you to deliver, the core things that could compromise the safety of your personnel.
What are the things that could cause your systems to go down? But those are the things as you start looking at the highest level of the organization. It really comes back to, again, just like I shared with that second lieutenant story, the mission of the Air Force is flying planes, dropping bombs on targets to either defend or deter. And as you start looking at the enterprise that you live in, whether it be the highest level or the seat you sit in.
You just gotta think about what are the things that could derail the core mission that you have responsibility for. And as that ratchets up, obviously the level, a span of control of who has responsibility ratchets up to. So again, your top five, your your top five things in the smaller organization may not even register in the top five once it gets to the enterprise level. But so I think it's relative to where you sit, is really how I answer that question most instructively.
But really when you get to the C suite levels, it's certainly when you start thinking about enterprise at its highest level and the impact that this enterprise risk list will have on the overall core capabilities of why the organization's in existence and the people that it serves.
Natalie Bulger (34:57)
And I think that's the beauty of a really well-developed risk framework is it doesn't have to be complex, but it has to be clear in how it translates from level to level. So I can still look at the same exact identifiers and indicators, but once I move it up a couple levels and that environment gets much larger, the power of my small part might dilute a little bit. And that's no, and I've had to, I think you and I both do it. It's not anything against that group or that person apartment. It's simply
This is how it all connects. Now, if you can tell me if that failure on your part directly now prevents our suicide prevention group from doing something, now we have a little bit of a different conversation. So it's a relationship-building thing. And that's one of the pieces. So silos when it comes to risk. And so I'd like to know, I want you to put all three hats on, right? Military, federal agency, you're now in the private civilian sector.
Charles S. Tapp II (35:38)
We we definitely do.
Sure.
Natalie Bulger (35:54)
Is one better at breaking down silos in these conversations? And is one potentially much more risk-adverse or risk-accepting than others from those industry labels?
Charles S. Tapp II (36:02)
Thank you.
That's a good question. So I think there are challenges that are equally complex, but for different reasons in each of those different places. In Department of Defense, again, because you think about risk, usually thinking about what are the things that are going to cause somebody to get injured or killed in terms of the line of duty. So when you think about risk in that respect, it certainly has a more catastrophic endpoint when you think at the enterprise level.
When you think of industry, usually you're thinking of risk and and its impact on the viability of your organization weathering financial storms or dealing with you know, if if an issue goes wrong and we are stockholders, how will they behave? And those so those, you know, have those type of of of risks. And then we start also thinking about being in civil service,
you start then thinking about risk in terms of can I serve the American public in the way that our organization was designed to? Because in many cases in the federal space, these are safety net organizations. I mean, generally speaking, when you think about the federal government, you're providing services that people can't procure on their own because of their nature of them being for the safety and security of the population or their safety net capabilities that people need.
So you don't have the opportunity to get those wrong because number one, there's generally no competition to fill that gap. It's the government or nothing. and so it's important. But the risks that come in there is availability of funds from taxpayers. That has a huge impact in the federal space and in the commercial space, it's really around the ability for you to have a product that's valued so that people are willing to pay for it. So I think those risks are equally challenging, but they show up.
And the impacts are felt differently because of the source of resources that are out there to eradicate or address a stated risk.
Natalie Bulger (38:16)
You bring up a good point, you know, when we were at it in federal agency life, it was also it was the taxpayers that were stakeholders too, right? Because you wanted to use their money that they were ultimately putting into the system in a way that did what it was meant to do for those veterans. So you have kind of two balances to really, you know, pressurized on. And I think in some ways that made us a little more risk adverse from a standpoint of if it's working, let's not break it.
Charles S. Tapp II (38:23)
Absolutely. Yeah.
Absolutely. Very true.
Natalie Bulger (38:46)
But we can also see, and this is not judgment, but in this most recent administration change, how quickly the areas of risk that folks were willing to take on shifted.
Charles S. Tapp II (38:57)
Yeah, and and and that's a very good point. In many instances, particularly in the current administration, you know, being apolitical in terms of, you know, party alignment and all that things, the one thing this current administration has done has really been a disruptor. And I mean disruptor in in the the best of sense, best you know, best of best of intentions, meaning they're they're come in and they're saying, We're willing
To disrupt the status quo. We're willing to challenge the way you've always done it. We're willing to say that we can take and make technological advances where in the past we were too conservative to do so. And this administration has basically said we value trying something new. So get on board or get out the way. And to me, that opens the door to really asking yourself, you know, what are the opportunities going back to your earlier
reference to a SWOT analysis, what are the opportunities that we have? What are the risks that are out there if we try these certain things? Let's use AI because AI is the hot thing now. Everybody wants to use AI. I mean the the the best and the worst thing that we ever had is ChatGPT on your phone, where you can actually write yourself a a a wedding speech in 30 seconds. And people say, my gosh, I've got to be able to use this for all the things.
Well, ChatGPT is great in some instances, but not in others. But the question then becomes, what is the opportunity to use it so that we can gain some effective and efficient effectiveness and efficiencies? But what are the risks that come along with it when you start entering in PII? Or you start introducing in there the it does this bot have the ability to make decisions that could impact life and death from a healthcare perspective?
Or will it, you know, learn itself and become an iRobot and and do bad things in DOD? those are some of the things you have to weigh as you start looking at the opportunities and the associated enterprise level risks that come along with this new capability. But again, the current administration again is bringing on a disruptive mindset, which I think is healthy if you want to see technological advances move forward, is to have that environment where it's okay to
Reach out and try new things and experiment because experimentation usually leads to evolution.
Natalie Bulger (41:27)
Well, and I think what we're gonna see is a weird impact crash course of groups that did not have well-defined risk assessments on file prior to some of these pressures to shift and move. So there is nothing that really says these were the known consequences we would be up against to inform, hey, honest we're 100% on board, return to office, whatever that might be. Here's what you need to keep in mind when you do it. There there wasn't any of that in so many places.
Charles S. Tapp II (41:38)
Right. Yeah.
Yeah.
Was.
Natalie Bulger (41:58)
Which is why we're now seeing a lot of this kind of kickback around. And it's oftentimes when you see a lot of the legal cases because stuff just happens. And then we go back and we go, that was risky because we should have looked at these kind of components. And it can happen anywhere. So I know we're talking about federal agencies, but this is a new board that comes in in your nonprofit. This is a new private equity firm that buys out your organization and just so I think one of the beautiful things to take.
From this is even if you have the first discussion and you write down some things about these the risks we know we're up against, that when those transitions happen, they set up really good conversations
of, hey, we have these things that we've not been touching
But they get you that seat at the table. It's like the entry point, right? It's like knock, knock, knock. I have this nice little risk manual to set you up to have the most successful first 90 days. Beautiful switch versus let me come tell you everything you should not be doing.
I g I w I wanna ask, you've been out now for what, a two years. A little over a little over two years. have you learned new things about risk processing, conversations, all of that in that kind of shift into private sector and doing things that it's still associated with kind of the groups you had before, but in a new way.
Charles S. Tapp II (43:02)
yeah, it's about two years. A little over two years.
Sure.
Yes. So the thing that I that was very exciting of shifting from civil service out to industry was that the focus of industry is to come in and bring new ideas. I mean, that's really the you know, in industry there's two two ways to approach business, protect what you have or to introduce new capabilities that allow your potential clients to
gain some momentum because of the new capability that you're introducing. So to me, again, most people in industry would come out and say, you know, they're constantly trying to create new capability that will allow an organization to accelerate mission accomplishment. So that's the thing that I've really enjoyed being in industry, particularly being a former VA, you know, senior leader and now being an industry partner.
is I understand the pain points that we experienced. And now I'm able to marry those up with capabilities that are being cultivated to be able to reintroduce those and saying, okay, here's the thing that we struggled with, but here's a new opportunity that you can invest in that will allow you to tackle that pain point. Because again, as you start thinking about the needs that are in the federal government to serve more people and to serve them faster.
Most of that's gonna be technology informed. I mean, think about it. When our parents were, you know, in our age bracket, you know, many moons ago, is very different than what we call the Amazon culture of people today. Right now, in the Amazon culture, you want things instantaneously. I on my phone, I can go and schedule a trip to Europe. I can order groceries to be delivered to my house, and I can go through and file
file an insurance claim via your phone. So you want that level of instantaneous gratification for lack of a better description from the experience you have with the federal government and the agencies that are serving you. So technology is that opportunity to accelerate the speed by which services are delivered, and with the hopes that it also delivers more consistency in the level of service.
And certainly you want it to be more accurate in terms of level of service. So those things I think technology's allowed us to accelerate as long as technology is viewed as a partner to humans as opposed to a replacement to humans. And those things again allow you to again attack those risks that are out there. And many risks in the federal space are aligned to by speed by which you deliver services is a huge risk capable risk
consideration across many federal agencies.
Natalie Bulger (46:10)
So one of the things I want to touch on while we close out is the everything you and I have talked about today, where like, we've spent a l you know, our career kind of developing this, being in it. And folks might be like, How do I even start? Like, what is even the first step? And I admittedly, I've done some training. George Wash George Mason has a really great chief risk program. Denise and I went through it together. works. But
Charles S. Tapp II (46:32)
Yep. Same.
Natalie Bulger (46:36)
But you know, this is one of those because risk is so different based on the lens you put on it, sometimes the best education is actually hands-on, like in it. But what's your recommendation to folks that are like, I wanna do more with this? Like this resonates with me. How do I get more involved in these types of services, projects, departments, things like that?
Charles S. Tapp II (46:41)
Sure.
Yeah. Yeah.
So the first step that I I introduced to VBA when we began our risk journey was to lay down a foundational lexicon. You needed to learn the language of risk. What's a risk appetite? What's a risk statement? What's my risk tolerance? And people like, aren't those things synonyms? They are not. So we
So we had to establish a foundation, like I said, a lex of lexicon relevant to the risk discussion so that people would understand them. And then we had to add definitions around each of those concepts relative to the organization. So I think that was very important. So really, again, first getting some foundational training. The other thing is that it's important not to have this risk discussion in vacuums or in silos, because risk, when you start thinking about them,
There's complementary risks that persist across different business lines or different components of your organization. And then some that are unique to just your mission in the broader scale organization, but you've got to be able to then rack and stack those risks relative to the overall success and mission that focus that you have. So I think those things are all important in terms of again, understanding what the risk terms mean, what they mean in context to your organization.
And how there's interplay between different components of an organization as it pertains to risk. Those I think are extremely important when you first begin on that journey. and then the thing is gonna be how do you then mitigate those risks? And the default many people have is I need more money and I need more people. And to me, that's the easy button. And it's also the hardest to achieve. Sometimes it's really around policy changes or structural changes.
To align the things you already have to the needs you have that have emerged today. The other thing is going to be when you look at the risk discussion, it also gives you license to stop doing things that you may have always done. I've been doing this thing for 20 years. Why do we still do it? I don't know, but we've been doing it for 20 years. Well, 20 years ago it may have been relevant, but today it's not. Because things have evolved, new priorities have emerged, new capabilities are now in play.
that make that thing you did 20 years ago not as relevant or important or in or necessary at all. So having these risk discussions should be informative to being able to help drive not only discussions around risk, but most importantly, drive discretion discussions around priorities. And those things have to line up in terms of priorities, current resources, risks that the resources that you have and the priorities that you have
don't align with why you're in business as an organization and how do you make changes or or move forward to make adjustments relative to all those things.
Natalie Bulger (49:56)
And there are things that I think as well, if you're interested in getting into this space, is listening's one of the very first steps, right? Everyone will tell you what they think is risky and not risky around you. And then being able to advocate for certain stuff or put those pieces together. Risk professionals are connectors like none other. And I know I just recorded with a a gentleman who, you know, one of his premises was if I ignore this, for some companies, they think that that makes it less risky for them. But in reality, if they ignore it and one person loses their life.
Charles S. Tapp II (50:23)
It is not.
Natalie Bulger (50:26)
It it really isn't. Like you don't get a free pass for that just because that's the lens that you put on things. So I think and and sometimes it takes the people that are there that are the ones at risk to say, I would rather you risk XYZ happening than risk someone I love not being here anymore. So
Charles S. Tapp II (50:28)
We truth.
Yeah. Yeah. Yeah.
Yeah, absolutely. Absolutely.
Natalie Bulger (50:47)
I really just I appreciate the whole kind of transparent conversation. If folks can't tell, this takes time. It's a real competency builder for everyone, including yourself along the way. And results aren't immediate. When you talked about stopping something, stopping something might take an entire year if you like realign people and you realign tasks and duties. But in re in the end, it creates this new space for new things to potentially bloom and innovate. So, Charles, any last thoughts that you'd love to share with folks?
Charles S. Tapp II (50:54)
It does.
Yeah.
Natalie Bulger (51:17)
as we wrap up. And I'm chuckling just because I'm like, well, I'm glad we risk mitigated a little bit. You had a second device to hop on when our tech went down. I could have pulled us to Zoom if need be. But like we were doing real-time risk mitigation today. But what are some of the final closing thoughts for listeners?
Charles S. Tapp II (51:25)
Absolutely.
Yes, we were.
I think you you've touched on the the point that I think is very important that this journey takes time. over the almost five years that I served as the CFO and CRO, we began our journey. I became CFO in April of two thousand nineteen.
We began our risk journey in terms of laying down that foundation in June of 2019. We really didn't gain traction in terms of it being instructive, where we were actually aligning our risk principles to budgetary concepts until the summer of 2022. So it took us a year to lay down the foundation of Lexicon and get buy-in. It took us a second year for people to get used to it and get into the pattern of having open discussions around risk across business lines.
Then the third year is when we started introducing the first foundational steps of how do you align risk to budgeting. And then that fourth year is when we actually introduced risk to the president's budget. Everything was done very methodically and intentionally, but the thing that you iterated on just a second ago is this takes time. And it takes commitment over time to stay aligned from a risk perspective. Cause once you said, we've done it, we've complied.
We set it aside, you start seeing the negative consequences of not having those risk discussions anymore. that because things continue to evolve and change. So it takes time, it takes consistency, and it takes commitment in order for you to truly have a risk-informed organization that truly serves its purpose. And that is to help drive risk-informed business and budget decisions.
Natalie Bulger (53:19)
Awesome. Great kind of final close up. But before I let you go, if folks have been like, I kind of like listening to Charles about this, maybe he could talk to me more. How can they get in touch with you? How can they find you? I'm guessing LinkedIn is a really good spot, but how else can they reach out?
Charles S. Tapp II (53:27)
See you fine.
Yes. We
yes, LinkedIn is a great one. I'm very active on LinkedIn. So if you just look Charles Tapp the second, I'm easy to to locate and find and certainly welcome the opportunity to have more dialogue with people who may be interested in this risk journey or the the journey that I've had individually that hopefully was informative and instructive to the success that we had at the Veterans Benefits Administration.
So
Natalie Bulger (54:03)
Awesome. Well, thank you, Charles, for joining. This has been great. thank you for being a mentor along the way and kind of setting the stage for a lot of what I was able to learn. And hopefully those listening have really taken something from this. So appreciate you taking the time today. And for everyone listening, check the show notes. We'll put the link to Charles LinkedIn down there and some information on Steerbridge if you're interested in what they do. And can't wait to chat again with everyone soon. Thank you again, Charles.
Charles S. Tapp II (54:10)
But you're too kind.
All right, thank you for having me.