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Risk Management (RM) 101 – Foundation or Risk a Fall

Key messages: It’s the journey not the destination; build a solid foundation first;

Most individuals want to achieve the best and aim for the highest in whatever they pursue and to get there in record time. That is to be admired from one perspective yet fraught with danger from another. My concern is that the original focus and intent has been lost; i.e. to build a solid foundation. If you build a house by laying the foundations first and then instead of letting the concrete cure for a period of time the next day you start erecting the frame then it may look good but at some point in the future it may collapse. The focus appears to be on the result or outcome rather than ensuring that a solid foundation has been built in preparation for the journey moving forward.

Take for example a common situation of a young person who wants to have their driving licence as soon as possible. They will invariably take the quickest and easiest pathway to get there and too often are not concerned about whether they can drive a vehicle in all types of weather and conditions. They have their licence and that is all that matters, as they can now drive themselves and their friends around free of parents.

Visualise this scenario; the same “new driver” encounters conditions on their second outing of very heavy rain. They have friends in the car. The driver is driving within the speed limit yet the car fishtails on the slippery road; the driver quickly loses control (because they do not have any experience in driving in these conditions) and the car ends up wrapped around a power pole with all occupants of the car, except the driver killed or very badly injured. The driver and the other occupants are all 18 years and younger. Can the driver recover?Maybe…….

Figure 1: What happens when we are not ready for all conditions

Because we seemingly short cut a good reliable process there was no solid foundation and structure created; we literally must start all over again, if that option is available at all. Similarly, the earlier example of a house built on a foundation that has not had time to cure properly. Can we start over again… of course but at what cost??

So how does this relate to our world of risk management? By building a solid foundation and avoiding the temptation of fast tracking and quick fixes, spend the time covering the basics. This is what I call Risk Management (RM 101). Organisations should build their Risk Management system from the ground up. ISO 31000:2019 provides that foundation.

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Figure 2: ISO 31000 Risk Management Process Steps

Take the time to ensure everyone in the organisation understands the vocabulary used in risk management; design the risk management structure (refer to the risk management process steps in Figure 2); and then ensure all those who need to know and apply risk management understand and practice each process step.

Embed the process steps and build the core team that will then be used to train others in what to do and how to do it. The only other aspect required for the creation of a solid risk management foundation is to use software to manage the volumes of data needed to be collected and distributed and for informed decisions that need to be made.

Figure 3: Fundamentals of a Solid Foundation for Risk Management

Now you have the basics of a solid foundation upon which you can build an enhanced capability and a back stop where should anything falter or fall then you still have the solid foundation on which to rebuild.

The next time you rebuild, though, needs to be different and better, because we should have studied and learnt the lessons from the past. Simply going back to what was before or back to normal is not good. When things were that normal it failed so why go back to that same point? We should have understood the mistakes (that which we did wrong) and fixed them as well as capitalised on the things we did right. Why do things twice if you can do it right the first time from a solid foundation – RM 101.

Note: the term risk in this article only refers to the downside

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