Why should we pay attention to stories in the press about remote risks? How should they be approached?
In recent days Iceland’s Bardarbunga volcano has certainly kept us guessing. 4 years ago the Icelandic ash cloud descended: it was transformational in its impact. No one expected it and no one was prepared for it.
If risk management really is important to Business, then how much time and resource should be spent on its analysis and assessment? Corpress LLP is launched this week in to a world of dynamic risk and continual challenge, in which organisations, specifically their senior executives, have to meet regulatory requirements on governance and investor demands on risk, not to mention customer and stakeholder expectations, reputation liability, press scrutiny, employee trust …and more.
Where does it all end?
The Eyjafjallajökull 2010 ash cloud severely disrupted European air traffic, with a knock on global impact over a period of several days, generating a plethora of media stories on company response efforts as multiple crisis scenarios began to emerge. As a father with a teenage daughter stuck in Reykjavik, it certainly focused the mind on risk.
Look at the news headlines today and not only is Iceland back amongst the top stories regarding its unregulated export of volcanic product, it shares the news with other quite extreme risk scenarios. We have the Ebola virus in West Africa and growing concern over the Russian involvement in Ukraine.
This last issue increases dramatically the potential for energy disruption in Europe this winter and in a worst case scenario, it could be argued that we could spiral into what is almost unimaginable: a European war on the centenary of the war to end all wars.
How can Business respond?
Do we rush around analysing all these potential impacts, assess the risks and put in place mitigation measures or should we ignore them and hope they will go away?
Leave it too late to analyse the risks and we are in danger of having to manage in a reactive way; spend too much resource on things that never happen and we may miss the real problems.
Ash clouds, viruses and power outage are real risks: they have the potential to disrupt business and supply chains, impact costs and even threaten economic recovery.
But whilst we can speculate on the impacts and probabilities, the likelihood still seems remote. Justifying significant effort to assess the implications does not feel like good business practice. After all, we still have the business continuity plan for recovery and the crisis plans if we really need to react quickly.
So why should we pay attention to what seem like remote risks and how could they be approached for the advantage of the organisation?
As a partner of Corpress, I believe in an approach that adopts innovative techniques based on the development of capability across the organisation to identify, communicate and manage dynamic risks.
Horizon scanning and scenario testing
One technique that offers significant benefits to organisations is a combination of horizon scanning and scenario testing.
- Horizon scanning is a technique for detecting early signs of potentially important developments
- It uses a systematic examination of potential threats and opportunities
- It can be effectively combined with scenario testing in a risk workshop environment
- The potential output is to embed easy to use tools and techniques which many companies can adopt to reduce uncertainty, seek opportunity and protect their business from crises.
The key is to focus the organisation on building resilience: it is not to expend lots of energy chasing all risks.
When combined with good communication, engagement and capability growth, we believe the building blocks for resilience can be woven in to existing risk management programmes.
Then the ash clouds, viruses and power outages become useful exercises and helpful stories to promote continuing development of good practice across all elements of resilience and they do not remain as forgotten records in a spreadsheet.
Build on your investment
Our approach at Corpress is to build around resilience and people and seeks to take forward the work that most organisations have already completed on risk. We feel continual development of risk arrangements is best achieved through the adaptation of the existing plans and processes. This means developing programmes to fit the maturity of the organisation and not seeking to rewrite, rework or throw away what is already in place.
We would be very interested to learn of your views and techniques you find useful to embed good practice in risk, response and resilience. Please use the discussion box below or alternatively contact us through social media or E mail.