The vastness of risk management

Many people think of risk management as focusing on operational issues (supply chain, competitors, etc). Too often we picture it as a “risk listing” exercise—think what might go wrong, write down those things as a list, and continually review the list and how we’re handling those items. That approach doesn’t make risk management very attractive; and it’s usually not very effective.

But often what sinks a company or operation is something that comes completely out of the blue: the project might be doing fine, but then a cashflow crisis causes it to be cancelled; the transformation is progressing well, but then the leader departs; the audience is building nicely, but then there’s a terrible data breach. All of this was brought home to me when I read Norman Marks’s latest post about handling allegations of improper conduct—the kind of thing that comes completely out of the blue.

Some may shrug their shoulders, and say those out-of-the-blue things are just life. But the executive and the risk team cannot wash their hands of them: not when they happen, not before they happen. It’s their responsibility to ensure the organisation is in a good place and sufficiently robust to handle the unexpected. If this was easy and obvious the risk team wouldn’t be needed.

As it is, the executive and risk team need to be constantly looking beyond the day to day, looking ahead into the blue. Will the project have made a positive difference even if it is forced to abort prematurely? Does the team understand and support the transformation for it to continue for a while under its own momentum? What are we doing to protect our data and handle the inevitable breach? And do we have a culture where whistleblowers are treated fairly and discretely?

This is partly why I like to talk about uncertainty rather than risk. Risk seems rather narrow, much closer to that uninspiring clipboard exercise. Talking about uncertainty is more open-ended, and helps people look at situations more widely. In that sense, risk management is vast, and demands imagination and creativity.

Photo by Jesse Wagstaff