Prevention is better than cure, but how much time do you devote to preventing things going wrong?
Risk Management seems like an imposing concept to some people – it’s not. Risk Management is an agreed way prevent a fire or firefight should a fire break out. You should be managing risk.
We all know the following expressions;
– prevention is better than cure
– a stitch in time saves nine
– prayer for the best, plan for the worst
– "be prepared” - the Scouts Motto
– Murphy’s Law - if something can go wrong it will go wrong
So it's very common to have a sense of risk. But it is far less common to take action to stop it.
The Space Shuttle has 2 different operating systems so that if one fails, the other could take over allowing it to land safely.
HOW DO I MANAGE RISK? - a table with 4 columns
- What can go wrong? first column
- Level of risk – impact and likelihood (note low, medium or high for each, High/High take priority)
- Ways to mitigate - fix it if it does occur or how can we prevent it occurring in the first place
This is a creative process - a calm brain state is preferable - and it works best when all skill sets are available - so have team meetings to discuss.
WHY DO IT IN ADVANCE?
- may lead to insights to design risk out of business altogether – realisation of the size and the impact can lead you to preventing it from occurring altogether
- some good mitigants may take time to put in place – need to request approval for time and money
- may need to plan it to put in place – this will take time that is not available once it’s an emergency
WHAT’S THE VALUE?
It’s the opposite of increasing future revenues
- decreasing future costs or unplanned and unpredictable costs
Having agreed way to mitigate in place
- means action can be taken fast
- without your input as boss (when required, appropriate)
- making you redundant
CLASSIC SOLUTIONS
- Risk of data loss - back up to the cloud / use DropBox
- Risk of fire - take out business insurance
- Staff get things wrong - write a procedure and train your team
- Risk of sales falling - mitigate by innovating your product and having loyal customers through great customer service
Any time you can find to prevent things going wrong can be very wisely and profitably spent.