Is Risk prioritised enough by leaders?

When I was running my first business nearly 20 years ago, I was a member of the executive coaching group, Vistage.

One of the many things I picked up, and have utilised multiple times since, is a simple plan on a page template which captures and communicates internally key components of the plan of any business, which include initiatives and objectives relating to sales, product, customer, finance, operations and also and importantly risk.

Embracing risk is critical as an entrepreneur and a vital part of developing a disruptive and fast growing business.  Mark Zuckerberg’s internal motto for Facebook  was “Move fast and break things” and Jeff Bezos instilled the culture at Amazon to be “Prepared to fail” when driving their internal development projects.

However, there are many forms of external and internal risks that if not given attention by the leader can kill or seriously injure a company very quickly.  I think these risks can be broadly categorised as -

Operational Risks: these could include system failures, supply chain disruptions and single points of failure, and what is now a significant challenge for all businesses cybersecurity risk.

Financial Risks: these could include fluctuations in revenue, costs of goods, customer concentration, currency exchange rates, banking covenant breaches and macro-economic issues.

Compliance Risks: these could be related to both general and specific legal regulations, data protection laws and GDPR, health and safety and specific industry standards.

Reputational Risks: Resulting from negative customer or public perception, data breaches, and ethical lapses.

Strategic Risks: these involve competition developments, technology advancements, and business model disruptions.  

All businesses should regularly follow a process of identifying and monitoring risks, assessing them and developing a plan to mitigate them captured in a risk register that is a live document for the business and reviewed regularly by the board.

Both taking risk and managing risk has to be a key component for all leaders in order to maintain success.  On reflection it’s not something I see consistently enough in board packs and the board meeting discussions and something we should address moving forwards.

 What do you think? Would value your thoughts.