The Campbell Academy Business Blog

Risk Management

As we move through our journey in business, growing, building, making things better and advancing the organisation as it passes forward so, we enter into the realm of leadership where we have people to look after, care for, and keep safe; it's part of the job of running our organisation.

If you extrapolate this out into the realms of huge businesses (the ones who have souls, try to look after things carefully and curate them honestly), you end up at the centre of risk and risk management and deciding how to safely pilot your ship in the right direction for the longer term.

One of the problems with this attitude is that it reduces your agility, entrepreneurial vision and ability to work and act quickly, swiftly and bravely, so risk as a concept in business is fascinating and takes quite a lot of intellectual firepower to work around it.

Take, for example, the job of a board of directors (trustees) in an educational trust in the United Kingdom; they might have overall responsibility for 30, 50 or 100 schools, a huge budget, and a huge complement of staff and infrastructure and suppliers and so the biggest role, the most important role it would seem is to mitigate and manage the risk to the whole of the organisation moving forward, and this means that people become averse to risk because they see their role as avoidance of risk, when in fact, for brilliant businesses it's not avoidance of risks, it's management of risk, it's accepting some aspects of risk as a trade-off for advancement and development and improvement.

And for those of us who run very small businesses and who have the privilege to sit at the top of those businesses, that's the game we find ourselves in.

The best way to manage risk is to have the ability to quickly have objective information around as many subjects as you can within your business, so Instead of just going mental at somebody who phones in sick on a Monday, it's better to understand how much that is happening by that individual, by everyone, to see if there's a bigger problem, a greater issue related to the business that's resulting in the risk of people not turning up for work.

Another example would be if you watch the news and an American president decides to completely derail the whole of the global economy for fun, and your stocks drop, and you have an app on your phone that makes it look like your pension is decreasing in value and therefore you go into work and cut people's wages or reduce your supply costs or simply try to sell more treatment to people who don't need it.

The alternative to that is to be able to have objective measurements of your finances, understand what your budget is moving forward, understand how much stability you've got for the times when the difficulty comes (and it always comes) and then make decisions based on that.

And so when we live in a world where we should not take undue ridiculous risks which are likely to take us out of the game and not allow us to keep playing (I've done that on at least three occasions, and it's not advisable) neither should we create an organisation which is so averse to risk that it dies a slow death of stagnation.

Figuring this out and figuring out where you sit on the visual analogue scale of high risk to low risk is a fundamental philosophical thought process that allows you to push your business in the direction that you want and philosophically in the way that you want.

In the end, you can't get to these things if you don't understand why you're there; you can't head in the direction that you want if you don't have a map; drawing the map, deciding where your North Star is (your ultimate destination) seems to make complete sense as we try to navigate a world which continues to be more volatile, more uncertain, more complex and more ambiguous.