Monday, August 11, 2008

Risk Therapy 103

In the article Risk Therapy 101, we explored the reasons why Risk Management is seen as a business imperative by CEO’s and yet it rarely translates to effective activity within many operations. In Risk Therapy 102 we consider ways to address the gap. Risk Therapy 103 is about motivation; why bother, really?

You’ve heard of the 80 /20 and 90 /10 principles, well these apply to the characteristics of businesses as well as people. We are familiar with statistics which recognise that many businesses fail in the first two years of operation. There are many reasons and usually it is a combination of factors. So why is failure so prevalent? Why can’t you dodge the bullet?

Well you stand a better chance of doing so if you just step back once in a while and take a look at the big picture. New business owners and operators are usually preoccupied and excited by the business and its potential, often blinding them to the realities of their true situation. Insufficient attention is given to initial and ongoing strategic positional analysis. You can miss both the good and the bad elements within your business environment.

Here are a few very simple guidelines:

  1. Breakdown composite results into their components. Remember, a bottom line is just that, the result of many inputs.
  2. If you’re looking for reasons for something but have more than one explanation from your stakeholders, then use the concept embodied in Occam’s razor; the simplest explanation is most likely to be true. That’s the problem or opportunity to address.
  3. Good and bad events will happen, but are not just beginnings or ends in themselves. They are learning opportunities though, which must be taken or lost.
  4. Businesses do not have to fail. Their resilience and risk health is a choice.

    If you are uncomfortable using Risk Management concepts to analyse your position, think of it as Performance Management. It doesn’t matter what you call it, it does matter that you do it regularly, at least once a year.

    If you get stuck with any of this, call us. This is our area of expertise. Sometimes it is more effective to have the benefit of an external perspective on a given situation anyway. If you are looking for a more discrete initial step then you can take the Risk Health check accessible from our website by arrangement with us.

    Our team of specialists has created a self-check system that allows you to quickly assess the Risk Health of any sized business, in any industry, in any country. In two hours, you can privately identify strengths and weaknesses in existing Risk Management structures or procedures, inherent strategic issues, problems and opportunities in your areas of expertise, key dependencies and some specialised risk identification.

    What is new about ART and Risk Therapy? It is the emphasis on the individuals in the business to take responsibility for their position and the development of it. Accountability cannot to be abdicated to some non-existent or mythical juristic entity. You can walk away when things get tough, or you can learn from it. Think of it as extended self development.

    For more information go to or visit our new Risk Therapy Website or write to me at
    This is the third in a series of articles. Further exploration of this new mindset will follow in Risk Therapy 104.

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