It's been said that the biggest risk is not managing risk, however I am not sure that is true. We manage risk every day, either consciously or not, so the real issue is how effective we are at doing so. In this short video I share five potential flaws in the way we manage risk.
Effective risk management requires strong and sustained commitment by management of the organization. The “tone from the top” encourages risk awareness across the organization and staff to be accountable for their actions. Strong leadership utilizes the knowledge of all staff and team members in determining controls before risks occur.
In his book, The Fifth Discipline: The Art & Practice of the Learning Organization, Author Peter Senge talks about the importance of developing core learning capabilities, one of which is reflective conversation. Skills of reflection concern slowing down our thinking processes so that we can become more aware of how we form mental models and the way they influence our actions.
He goes on to say that mental models are deeply ingrained assumptions, generalizations, or even pictures or images that influence how we understand the world and how we take action. Very often, we are not consciously aware of our mental models or the effects they have on our behavior. For example, we may notice that a co-worker dresses elegantly, and say to ourselves, “She’s a country club person.” About someone who dresses shabbily, we may feel, “He doesn’t care about what others think.” Mental models about what can or cannot be done in...
Stephen Covey, in his book The 8th Habit, describes a poll of 23,000 employees drawn from a number of companies and industries. This poll revealed some startling information about employee understanding of organization’s objectives.
· Only 37% said they have a clear understanding of what their organization is trying to achieve and why.
· Only one in five was enthusiastic about their team’s and their organization’s goals.
· Only one in five said they had a clear “line of sight” between their tasks and their team’s and organization’s goals.
· Only 15% felt that their organization fully enables them to execute key goals.
· Only 20% fully trusted the organization...
We can all recall a stimulating conversation with someone that turned into a brainstorming session with a great exchange of ideas. As the conversation continued, and the ideas built upon one another, it became quite clear as to the best course of action to take going forward.
Now imagine your management team engaged in a structured series of five conversations that ultimately allows them to make the best informed decisions that support the achievement of your organizations objectives. Let’s have a look at what those five conversations might include.
Where do we want to go?
Value creation starts with an objective-centric conversation. This would include clearly defining your objectives, including the desired outcomes and how they will be measured. This may include your strategic, operational and financial objectives, and provides the focus as you progress through the remaining conversations.
What is the current environment?
Understanding the internal and...
Success in business is not usually the result of a single element, but rather a number of contributing factors. Depending on the industry, it could be a combination of products or services, marketing, production, people, raw materials, location, etc.
One thing all industries face today is increasing uncertainty created by the rapid changes taking place in the world of business. Successfully managing this uncertainty requires a three-prong approach; strong leadership, quality decisions, and an integrated process. I call it the Managing Uncertainty Trifecta.
It starts with the tone from the top. This may be the most critical of the three elements because if it is lacking, any project will be doomed for failure. It includes clearly stating roles and responsibilities and how they will be measured, as well as a commitment to providing the necessary resources. It also includes communicating and consulting with internal and...
Look up the word “risk” in every English dictionary and you will see it defined as a chance or probability of loss, injury, or harm. Games of chance date back to ancient times, with gambling being a part of society since the beginning of recorded history. Probability theory evolved in the seventeenth century based upon mathematical efforts to predict the outcome of a game of chance.
Chance and probability rely on odds and statistics. These are the mainstay of casinos and insurance companies. Imagine a casino not knowing the odds of bets placed on the spin of a roulette wheel, or an insurance company not having the statistics on automobile accidents. Either of these industries would be out of business if they did not have the right information.
Most businesses, however, operate in a world of uncertainty. As an example, while the insurance company has the statistics on automobile accidents, they mean nothing to us. We...
I recently went to the theater to see the movie Sully, the story of Chesley Sullenberger, an American pilot who became a hero after landing his damaged plane on the Hudson River in order to save the flight's passengers and crew.
US Airways Flight 1549 was an Airbus A320-214 which, three minutes after takeoff from New York City's LaGuardia Airport on January 15, 2009, struck a flock of Canada geese just northeast of the George Washington Bridge and consequently lost all engine power.
Without enough time to go through checklists and procedures, Sullenberger had only minutes to make a quick decision about where to safely guide the aircraft. Unable to reach any airports, he glided the plane to a ditching in the Hudson River off midtown Manhattan. All 155 people aboard were rescued by nearby boats and there were few serious injuries.
Captain Sullenberger’s flight training, as a fighter pilot, glider pilot, and ultimately an airline pilot with nearly 5,000 hours in...
Risk is inherent in every business, and making the best informed decisions for managing those risks is critical in supporting the achievement of an organizations objectives. In this video I review the six different risk treatment options, all of which should be considered, and quite often they are used in combination.