Ed Andrew

There is a well known story about Richard Branson when he talks about evaluating new ventures. The first comment is that new business opportunities come along like London buses, there is always another one round the corner so don't worry about missing out. The second one is that the better the deal looks the more his team pull it apart as there will be weaknesses in every deal and risk in every deal. When you get hooked into what looks like a no brainer, an emotionally strong deal, then your risk threat increases as you are more likely to ignore the signs as the reward is so strong.

One thing I have found helpful is to apply the sandbox method of start up testing when mistakes are made. This also ensures a no-blame culture which encourages employees to openly share concerns. The sandbox assumes you may have control over one or more parts of a test, so as you test and fail you iterate until you land on a more concrete control. Once that control is tested you can then use that in the mainstream though you still keep testing in the sandbox to see if you can beat / improve the control. The purpose of this in risk management is that you are in a continuous improvement loop and avoid complacency especially when the market is with you and SOP's can be stretched.

One of the critical factors I see with businesses who have an elevated risk threat is with their SOP's. They are either being ignored due to poor training, lack of SOP's, time and productivity issues, or pure greed. Sometimes there will be occasions where you have a situation you did not anticipate and there are no protocols in place, those who survive this will have fostered a no blame culture where employees are rewarded for spotting threats and acting on them rather than ignoring them through fear of retribution. SOP's also require monitoring and reporting, there needs be an effective feedback loop in real time either through direct communication or dashboard reporting.

In my experience risk falls into 3 categories: - financial - operational - reputational Risk profile fluctuates based on many factors including shareholders, stakeholders, current market conditions, competition, cash flow, opportunity, assets + people. Results also fall into short term, mid term and long term. There is a direct correlation between the timeframe of the outcome you are looking for and the amount of risk you are prepared to take. You could hire a maverick CEO for a turnaround and replace them when they have stabilised the business and made decisions others would be afraid to. Be crystal clear on the outcome then apply radical focus to executing it while always keeping a peripheral eye on what else is happening.