What you don’t know matters!

You are successful. You are making your targets, the boss is pleased, and performance reviews are good. Everything sounds great. Of course, things go wrong and you manage these as they arise, that’s just the way it is.

When unexpected things happen, when things go wrong, what happens in your business? How much are you spending on insurance? How much on marketing to keep customers happy when they are impacted by the unexpected event? Looking backward, did you miss an opportunity? How much are you spending to prevent bad things happening? Chances are you don’t know, it’s just the cost of doing business. What if you could spend less, have fewer surprises, and be quicker to take advantage of opportunities?

At this point, you may be thinking you do this or that’s impossible. That’s OK but if you want to be more successful, then you need look at enhancing how you manage risks. You need to find a person who has expertise in risk management, who you trust, to help you. They need to focus on helping you identify the potential unexpected events in your business plan and help you decide what you will do if they occur. Be wary if they have a particular service to sell, even best intentions can suffer from bias, because they will focus on what is important to them and not what is important to you. You need a risk manager as part of your executive team and let them engage the various consultant experts to ensure the business gets the services it really needs.

Risk management is a relatively new business function. As a new function, it has become messy. Many variations exist of what good looks like. Traditional business functions such as insurance, accounting, and audit, are all claiming to be risk management experts. Each new crisis in the market place, creates a suite of new experts knocking at your door offering to save you for ruin. Regulators and law makers, with good intentions, are imposing an ever-greater burden on business. Do not be distracted by these. Risk management is actually just good business management. It does not need to be complex. Risk Management needs to benefit you. It needs to make it easier for you to succeed.

As a business leader, you will have an objective and a plan to get there. This is a great start. Now you need to build on this by considering all the different potential outcomes and deciding how you feel about those outcomes. Identify those which are truly unacceptable and must be prevented, identify those which are aligned to your business objective and should be encouraged, and accept the rest. You need to communicate this to your team. This is key. By telling your team, when they observe one of these potential outcomes, they will know what to do. If you don’t tell them, then they may miss an opportunity or expend resources unnecessarily.

Risk management, done right, works as part of a leadership team and helps the team to understand and overcome their biases. Yes, they have biases and it’s important to acknowledge this. A risk aware mindset is open to talking about what could happen. A tell tale of a closed risk mind set is the person who says “That can never happen here, I have been doing this job for 30 years, and its never happened”. Second, a good risk manager will make it easy for the leadership team to identify, assess, make decisions, and monitor all the potential outcomes. A good risk manager makes it easy for you to make the unexpected.

What you don’t know matters and you can understand it. You can be ready for unexpected events. If you want to be more successful then you need to engage a risk manager who focuses on what’s important for you.