19 Dec 2019

Start by knowing what your risk is to

Sounds simple doesn’t it? The evidence suggests otherwise.

We have lost count of the number of times we are called in as risk management specialists to help when risks are seemingly out of control. A recurring theme in many cases is complications arising when different parts of the business have different ideas of what is to be achieved.

Here are some typical scenarios: people going through the motions using a formula to deal with risks but incidents are still happening and opportunities being missed, concerns about ‘near misses’ with everything from workplace safety to information security, or unhappiness from senior managers that risks are not properly understood.

So we often need to start by working to make objectives crystal clear.

Sounds easy doesn’t it.

But it is surprising how often this clarity is overlooked to the company’s detriment.

An excellent illustration of this happened several years ago when local airlines were faced with disruptions to services because of a volcanic ash cloud from an eruption half a world way.

Volcanic ash and jet engines can be a dangerous combination. This was dramatically demonstrated by the early 1980s story of British Airways flight 009[1], which flew unawares into an ash cloud causing all four engines to stop.

However, this ash cloud was well mapped, having already travelled half way around the world.

Of the three major airlines in the region, two stopped flying (Qantas/Jetstar and Virgin Australia), disrupting thousands of passengers and hundreds of tonnes of air freight. The third (Air New Zealand) did not. It kept flying using different altitudes and routes to avoid the ash. This meant some passengers became separated from their luggage and some freight was delayed as the flight changes required planes to use more fuel. But most passengers and freight got to destinations, and mostly on time.

So what does this have to do with being clear about what is to be achieved? The core business of all three airlines is to carry passengers and freight safely and profitably. But only one airline was clear about this objective and worked out how to achieve this in the difficult circumstances. Air New Zealand had a number of risks to deal with from possible damage to its aeroplanes, to increased flying costs from using more fuel and carrying less load, to unhappy passengers who arrived before their luggage. The airline also had to face down malicious rumours that it was damaging its own aircraft.

The key factor was that all the risks were considered in relation to a clear objective. The airline knew what it was there to do, worked out the risks to achieving that, and worked out how to deal with them.

As this rather dramatic example illustrates, understanding objectives is the first step for dealing effectively with risks.

So, the journey to managing your risks always starts with being clear about objectives.

Getting back to those scenarios described earlier, some things become clear quickly. If individuals following procedures for controlling risks are clear about their objectives, they are much more likely to be doing the right things. Near misses stop happening when it is clear what we need to focus on and can figure out ways to do it. That feeling of unease can be tackled by risk management steps where everyone has a shared understanding of what needs to be achieved.

Reference 1: https://en.wikipedia.org/wiki/British_Airways_Flight_9



Steve Vaughan

Facebook LinkedIn link