It’s not the most exciting title is it?

And we’re certainly not people who would be full of smiles whilst reading an Expert’s Guide to Managing Risk.  Except for Mark perhaps?

Yet this is one of those things, just like strategic thinking, that we hear about all the time and know we need to be good at. Yet most of us have no idea what it means.

And so here we are with a simple guide to what risk management is, why it’s important, and how you can show your stakeholders that you’ve got it covered!

What is risk management?

Pure and simple… this is about spotting what could go wrong, before it goes wrong, and either doing something to avoid it, or planning how to manage it if it does go wrong.

My colleague Simona moved house recently, and one risk she was acutely aware of, was the issue of WiFi. What if the WiFi in the new home was not connected on time for her to work from home? What if the speed was not so good?

Simona had made clear to her provider when she needed everything to be ready. She had a plan for where she could go if the WiFi was not connected in time, and she had spoken to a range of providers to find the best speeds in the area. Notice the process:

1. Identify what could go wrong.
2. Look at options to avoid it going wrong.
3. Plan out what you can do if it does go wrong.

Why is this important?

Nobody likes it when things go wrong. We usually feel frustrated we didn’t think of the issue before it occurred, or we look for someone else to blame! In many cases, something going wrong leads to more work, efforts feeling wasted, and certainly emotions can run high.

When we have not carried out a good risk analysis (identifying things that could go wrong) and risk management (avoiding those things or planning what to do if they happen), it usually ends up in costs – financial, time, emotional. And of course, there can be reputational damage too.

What do customers think when things go wrong?

Look at the response to KFC not having any chicken, or VW falsifying their fuel economy, or M&S charging extra for large size bras…. It is one thing to upset a single customer. It is another thing to upset an entire customer base and have them shouting about it on social media.

This means that from a business perspective, risk management is commercially critical. If we do not avoid things going wrong, or manage them well, we could lose customers, profits, time, staff… the list goes on.

And what about from a personal or career perspective?

A common moan I hear from business leaders, is that their teams are not switched on to risk management. One engineering firm I worked with had an entire leadership team up in arms that their people were not thinking ahead.

“I feel like I have to do all the thinking,” one of the leaders told me, “because people at every level are not thinking about what is happening, what could go wrong and how to manage that.” We cannot blame our people for this, if we do not provide a safe environment.

This is why, if you’re a people manager reading this, your next read needs to be on psychological safety.

For the rest of us who are not people managers, what does this mean?

It means that we can stand out.

We can stand apart from our peers and show our potential, show our worthiness for career development and promotion – by being switched on to risk management.

Isn’t it just moaning or being negative?

I was working with a startup firm where one team was known for being super negative. Every project that came up, the team would list everything wrong with the project, why it wouldn’t work and what could go wrong.

This was such a missed opportunity. Instead of this team being seen as good risk managers, they were seen as blockers, moaners. The critical difference is how we talk about risk.

After a few sessions with this team, we shifted their emphasis to describing “potential risks” rather than “why this won’t work.” That language makes all the difference. Instead of me saying to you, “your idea won’t work,” I can say, “ok, that sounds interesting and I can see the benefits you’re imagining from the project.

There are a few risks I can see with it, so let’s go through them and see what we can do to avoid or manage those risks….”

Again, for your reputation with your peers, manager and senior stakeholders, do you want to be known as the person who lists all the negatives? Or the person who raises some really insightful points about potential risks and how we could avoid them?

The first can make you a blocker and someone others might avoid working with. The second will make you invaluable to project teams.

But wait! 

There’s more, we have the second instalment of our understanding on Risk Management and you can find it here…