Many current management books refer to the Management of Risk as a key managerial area - however remember that risk is around in everything we do - organization, travel, family and social life activity. A key tool in your leadership tool kit is to have a good understanding of where to look for risk and how to reduce the identified risk.
Prof John J Hampton's recent book "Fundamentals of Enterprise Risk Management" covers Enterprise wide risk exposure, but it struck me that a simple 5 point summary he sets out is applicable to all levels of our interactions - personal to Enterprise. The 5 points cover key areas and if risk is considered in each of these a leader would be well on the road to reducing exposure to risks.
1. Strategic Level Risk - where can my strategy go or be wrong?
2. Leadership Risk - Firms need strong leaders and solid managers to ensure decisions are taken and implemented. Are you/yours up to the task?
3. Subculture risk - where groups of employees or followers adopt divisive attitudes or personal rather than enterprise focused decisions
4. Business cycle risks - most business activities follow a launch, growth, maturation and decline pattern which needs to be tracked carefully
5. Horizon risk - often missed by many leaders who focus naturally on close proximity risks - long term supplies, business model changes or competitive responses are often hidden beyond our horizons and need to be actively scanned for.
As a tool make a point of regularly checking the 5 areas of possible risk in all that you do so that you can spot potential risks and mitigate them before they have serious consequences for your life or organization.
Till next week
Key take-outs:
- Regularly consider the areas of risk you face
- Ensure you have the right 'metrics' in place to track delivery and manage risk reduction
- Take actions to reduce or remove risk wherever you can
- Develop a risk aware mentality amongst your staff and teams
- Remember to consider current and close as well as future and remote risks.