Tuesday 14 August 2012

Risk Intelligence - When crisis hits


In a crisis, we don’t just react blindly to the stimulus in our operating environment – unless we have a morbid fascination with failure. We also should not become paralysed with indecision because a problem is too difficult, we don’t fully understand it, or we don’t like the solution. We need to invest in understanding and risk intelligence.

Good risk management is widely accepted as necessary for business as usual and for helping ensure an organisation is resilient to turbulence and sudden shocks. During a crisis, the need for good risk management is also paramount to success.

Every crisis has the potential to result in tangible, intangible, operational or reputational harm. When we develop understanding and use that understanding, a crisis can be overcome and impacts minimised – or leveraged in the case of opportunity.

What we need to do when crisis hits is to refresh our understanding of our changed (and changing) context to determine:

o   How are our staff affected?
o   What condition are our services and supply chain?
o   How are our other resources?
o   What has been the reaction of our key stakeholders?
o   Are our objectives still relevant or have they changed?
o   Has our risk tolerance or appetite changed?
o   Do we need some supplementary objective to address this turbulence?
o   How much space do we have to find the issues/solutions?
o   What do we need to understand and what resources are available to maintain that understanding?

There are many other factors to consider in understanding the evolving context of your own organisation in a crisis. As crisis leaders, complexity is an issue that needs to be tackled on an ongoing, dynamic basis.

After we have done this quick assessment are we ready to launch into action?

               The answer is both yes and no……..

The reality is that your emergency and crisis plans will already be executed which is great – but don’t think it is the end of the line. You still need to understand the unique complexity of the current situation, identify and manage risks – and yes, every situation is characterised by unique complexity even if a particular type of hazard has impacted your operations many times before.

Understanding is a journey not a destination, in the new context, we need to refresh our understanding of risks we have previously identified, but also identify new risks in the current context. These new risks may have a positive (opportunity) or negative (adversity) impact on objectives. These objectives may be both standing organisational objectives and new objectives developed in response to the crisis. They will also interact in both known (as you have identified) and unknown ways (requiring an adaptive response).

Like a house, success starts with good foundations. In a crisis, when we are most prone to react, follow our intuition and bias we need to step back, create some space and understand - invest in risk intelligence.

Saturday 4 August 2012

Watch out for the rock when focused on the forest


Everyone has heard the saying - can’t see the forest for the trees right? Certainly the ability to see the big picture when setting the business strategy is critical for any business to succeed. This is also a critical success factor during turbulent times. A crisis requires the leadership to step back and understand the internal and the external environment in the face of significant white noise and high tempo activity. They can’t do that if they are into the detail. This results in tunnel vision and target fixation.

What they do need however, is supporting teams, people who can focus on the detail, understand the mission and understand where they fit into that. This is powerful because it allows those staff to pick up on the leading indicators on something that could go wrong, often being able to take the initiative and prevent escalation.

Likewise, when already in crisis, the people on the ground are vital to success as they feed up information on how well the strategy is being executed and, if it is not working, where it needs to be adjusted. The value of such synchronicity needs to be identified and fostered as a critical success factor in the resilient organisation. This is also a part of good risk management and ultimately risk intelligence and success.

Leaders need to be careful that not everyone in a crisis is focused on the forest. Tactical sentinels are needed, constantly scanning, not the horizon, but the forest floor. They need to make sure the crisis leadership team doesn’t trip over the partially buried rock at their feet.

Business Resilience relies on a shared vision, mission and values but devolved execution with synchronised focus on the forest, the trees and the ground.