So, we are at the beginning of another New Year – happy 2015 everyone! We all try to change our behaviour on January 1st. We treat it as a new start and try to action change in some important way. Some people concentrate on personal changes, like losing weight or learning a skill. Others will set new business goals, perhaps involving profit or turnover.
Perhaps a slightly different take on a New Years resolution is to consider action to prevent problems in 2015. This needs a little more foresight though; after all what we want to avoid usually means understanding what we might meet.
When I was very small, I saw my Dad sprinkling some powder on the ground in the garden. To this day I don’t know what he was really doing. In response to my inevitable query he told me that he was sprinkling elephant powder. “What’s that for?” I asked in my childlike innocence. “To keep elephants away”, replied Dad with an absolute deadpan expression. I offered up the perfect response, my Ernie Wise to my Dad’s Eric Morecombe, “But we don’t get elephants around here Dad”. “Elephant powder works then, doesn’t it?” came my Dad’s predictable response; he may even have wobbled his glasses.
Although the story is a silly one, there is a truth that we sometimes implement actions to mitigate problems that don’t exist and then, with almost superstitious fervour, cling to these non-solutions to our non-problems as though our life depended on it.
Equally though, we know that there are real problems out there that we do nothing about. In the UK we have seen news reports about travel chaos over Christmas due to overrunning engineering work on the railways, and we have seen the usual weather related stories where “chaos” is caused by “plummeting temperatures” and “freezing conditions” as we are “lashed” by storms. These events were headline news, despite being as predictable as Christmas, because yet again people were utterly unprepared for the inevitable.
The trick is to tell the “elephant powder” from the “plummeting temperatures”; in other words what will happen and what won’t? All the time that people are clinging to elephant powder, and ignoring the possibility of plummeting temperatures, the difficulty of judging issues in any grey area becomes obvious.
Good, basic risk management will help; the first stage being to understand the risk. Let’s use “plummeting temperatures” as an example; the temperature isn’t really the risk, it is what the temperature prevents us doing that is the risk. Let’s say we make widgets in a nice warm factory – we can carry on making widgets whatever the temperature. So the risk is the transport infrastructure. Can our staff get to work? Will our raw materials get in? Can our finished product get to our customers? There are other causes of these risks too – staff being unavailable might also be due to industrial action, a lottery win, pandemic influenza, alien abduction – OK, not alien abduction– but you get the picture.
So some precipitating event causes the risk. If we are prepared for staff being unavailable, then it doesn’t matter if the precipitating event is weather, industrial action or anything else.
Once we understand the risk we can evaluate it. Some people use descriptors, some use numbers, but the key element is to have some method of comparing risks that are not alike. Once we have an evaluation, it is possible to balance risk. Is the risk of staff being unavailable worse than the risk of equipment breakdown? The evaluation guides deployment of valuable resource.
What Action is Needed
We need to look at what we already have in place to deal with this issue – perhaps people with less critical roles have been trained to cover for those in more critical roles. Crucially, this helps us understand if we have done enough, or if we need to do more.
If we need to do more, then we need to work out what we need to achieve, what resource we need to achieve it and when we want this objective completed. In other words, the mitigation of risk must take on the same priority as the other objectives in your business.
What Can Go Wrong?
Unfortunately, this is where most risk management goes wrong. Admittedly, there are some who do no evaluation of risk at all. For those that do, the completion of a risk assessment (yes I’ve used the dreaded words) is the end of it; as though an assessment will magically resolve the issue!
Consider the story of the three little pigs. For each of the little pigs the risk was identical: being eaten by the big bad wolf. All three pigs do a risk assessment and build a house, but only the third pig takes appropriate action and makes a house from bricks sufficiently resilient against the big bad wolf’s chosen demolition method of huffing and puffing until the house is blown down. Pigs one and two have various reasons for not taking appropriate action, depending on the rendition of the story, but whatever their reasons at the point where the risk becomes reality, they are as unprepared as those taken by surprise by winters being cold.
The conclusion must be that a risk assessment is the same as any other assessment. You wouldn’t get a survey on a property and ignore it, you wouldn’t read a critique for a West End show or a restaurant and ignore it – but somehow once we have done a risk assessment we feel that the job is done. Not so: we must act. If we decide to do nothing, there might be more pressing priorities after all, let’s positively do nothing– make an active decision to do nothing and review the risk assessment in a month, six months or a year as appropriate. Let’s not sleepwalk into not deciding and not acting.
A Mechanism for Making Decisions
Risk assessment is a mechanism for making decisions. We use it all the time for everyday activity, like crossing the road, and we act on that assessment, waiting for traffic or deciding to cross. When we systematise risk assessment to use in a business environment, we must take care not to make the assessment the terminal act in the process – the assessment must precipitate action or there is no point in doing the assessment.
So, a good resolution for 2015 would be to put into action the risk assessments that you did in 2014.
Have a fantastic 2015.