Risk management is a misnomer. Smart companies everywhere are spending more and more of their resources in minimizing risk altogether.
We are all grown-ups here, so let’s make it clear: there is risk involved in any kind of business. And bigger the operation, bigger the risks are as well.
However, this doesn’t mean that we should just accept risks as some kind of unavoidable evil of each and every business operation. As a matter of fact, there’s one huge trend we see emerging among smart executives.
Risk management used to be treated almost like an afterthought.
“Oh, look at these horrors! Let’s try to figure out what happened!”
It is good of course to look back on previous actions, and see what worked and what didn’t. But looking ONLY backward is nowhere near enough on a modern world.
So, in this sense you could say that reactive risk management is looking back on what happened. Proactive risk management is gathering everything you can, and then predicting what’s going to happen before no one can even guess where you’re going.
It would be impossible for us to pinpoint exactly what each and every company should do, but here are some good pointers for us to consider.
1. Employment data
One of the biggest risks ANY company will ever encounter has to do with their employees. Lawsuits, information leakages, accidents, loss of knowledge resources and so on. One especially big part of this is the risk of losing know-how to competitors.
How is your company making sure, that the wisdom stays in your company, even when the old dogs retire? You can do this with data.
2. Production data
Now, this is a huge topic in itself, but things like unscheduled downtime, work-related accidents and quality problems can quickly turn into a pretty big mess. If you have a factory to run, it’s very likely that you already have all kinds of data available. But is this siloed in some dusty corner, where it will hopefully refine itself, turn itself into insights and come knocking on your door? Hopefully not.
3. Market needs and wants
It’s amazing how some companies have still not quite catched up with the power of tracking their market. There are so many options available, everything from measuring quality, user experience and spotting emerging new needs. More amazing still is how difficult many executives still think this is. It’s not. You simply need to have the proper infrastructure in place.
4. Financial risks
Yes, this is a big one. It’s probably no wonder that CFO’s around the world are very keen on financial data, and they know how to demand access to it NOW. Cash flow must be in some kind of harmony with the expenses, otherwise an acute cash crisis could bubble up. Nobody wants that, so accurate forecasts are essential for good risk management.
5. Legal compliance
Everything from contracts, environmental regulations and workforce contracts should be tracked and analyzed carefully. A lengthy trial could easily end up eating so much resources that dramatic corrective action needs to be taken. It’s way better for your mental health to not get into such battles in first place.
Can we guess what your biggest problem in making the leap is? We suspect it has something to do with the data being in their own dusty siloes, and not having a clear strategy on how to get it out from there. Right?
This is pretty much the biggest problem throughout the world, so don’t feel bad about it. However, if risk management produces anxious thoughts in you, in the name of everything that’s sacred, do something about it.
Take this from us: you don’t want to wait until something really bad happens!
So, the next step for you is to simply tell us a little bit more about yourself. Let’s have a talk and see if there’s a natural fit between us. If there is, you will never ever be lost in the endless and pointless risk management of yesterday.
In any case, we recommend you work this out for yourself. You won’t BELIEVE the amount of money you’ll save and the amount of clarity and piece of mind you’ll gain.
COO, Service Delivery
+358 40 550 2524
Keilaranta 17, C-talo