What is Risk-based mindset?

Every decision You make is based on pros and cons. Sometimes it is so obvious You never think about it while other situations make You stop and wonder what the right thing to do will be. This is risk-based thinking in its essence.

What can go wrong in this situation and how do I avoid that it does, is another way of looking at it.

How do You bring this kind of thinking into Your business in a more active way?

Starting as I mentioned in my previous post by working on a larger scale. SWOT analysis, a risk matrix with probability and severity ratings, high level value stream mapping are all good tools to start with. But no matter what tool You use it can be of great value with “a third pair of eyes”. Someone who understands Your business but is distant enough to see through “the fog of daily operations” and be honest about the observations.

From there on it is important to plan how the risk-mitigations can actually be carried out in real life. No “management by posters” will prepare Your business for a major fire or a SOME-shitstorm.

Plan actual initiatives and make it clear why they are important and meaningful. Put someone in charge of the initiative. Make sure that KPI’s for reporting the progress are meaningful and possible to use proactively. When You get a report that one mio. subscribers have left Your company it is too late.

Getting risk-based thinking into daily operations can be done by re-writing (or at least re-thinking) all procedures and instructions. What kind of operational and/or strategic risk does this SOP take care of? Write it into the procedures. Keep track of how different procedures in the end all points toward achieving the overall goal of the company.

Remember that procedures and instructions must be compiled by those who owns the process. With no ownership the procedure will never reflect reality and the KPI’s will not give a relevant feed back about the process efficiency.

So; get started top down with high level risk analysis and bottom up with revised procedures. And while You are at the paper-work anyway, try to reduce the amount by eliminating unnecessary documents by using a risk-based mindset (“what will go wrong if we loose this instruction?”)

Good risk management starts at the top, getting the greater picture and then let it work its way down to operational activities that will improve You situation in the future.

Stay tuned for more interesting posts.

And if You not already seen them, have a look at my previous posts here.

For more information please contact EpsilonPlus here.