GDP Blog

IDENTIFYING RISK - IS YOUR ORGANIZATION A TRENDSETTER?

Posted by Seth Denson

Mar 18, 2016 4:30:00 PM

Recently, we had the opportunity to be part of an annual convention for one of our client groups.  As is the case at most conventions, there was a time for mingling and social interaction between the various organizations and members chicken_on_egg.jpg.pngattending the event.  It was interesting, as we surveyed the room, to see the differing statures, both in physical and in persona, of the individual leaders  these  companies represented..  As we observed the approximate hundred or so various business leaders in the room, it was fairly easy to classify them into one of three groups:

  • Those that have it together
  • Those that appear to; and
  • Those that don’t.

Now, I’m sure that my “on the surface judgement” as to these three categories might, in some ways, be short-sided as it pertains to only one categorical trait of these companies and their leadership. But given that we are fairly familiar with this industry and the majority of the differing organizations represented, we have some insight as to which ones are in their own class of success.  And, by the way, I don’t classify success by how large an organization is; rather how effective and efficiently they perform within their given market. In addition what their peers and colleagues think of them as well, but most importantly, what their employees think of them.

As our observations continued it dawned on me, “proper and proactive risk management is trendsetting.”

Each of the leaders attending the event we perceived fell into the first category (THOSE THAT HAVE IT TOGETHER) had. One commonality between them – they all were leaders of organizations that proactively were identifying risks.  Now, I don’t want to make the claim that an organization’s commitment to properly identifying risks is the single key to success, but it is often evident during our observations that those organizations doing so are most often times the same ones that are also performing at an exemplary level in many other aspects of their business.  In effect, when a company is continuously focusing on proactive strategy, their house is in order and functions at a higher level of efficiency and effectiveness.

The other category (THOSE THAT APPEAR TO HAVE IT TOGETHER), are those that do some things really well, and emit the perception that they are operating at a high level, but in reality, are only focusing on surface risks. Those are risks we typically identify as insurable risks.  As for non-insurable, deeper risks, which ultimately will have the greatest impact to an organization, they  may have their head in the sand and no idea about what is lying below the surface when it comes to risk.  These organizations may survive and be successful, in some cases for a very long time, but when the rubber meets the road and one of those unidentified risks becomes reality, they suffer greatly and many times never recover.

The final category of business leaders we perceived (THOSE THAT DON’T HAVE IT TOGETHER) are those that are so caught up in being reactive that they are not identifying risks, but creating even more risks within their organization.  These are the organizations that are at the highest level of risk of extinction as they are those that are most susceptible when an unidentified risk occurs.

When conducting our risk workshop with clients and prospects, we will often times tell the story of two clients.  In 2005 when Hurricane Katrina hit, these two organizations directly in the path of the storm were significantly and permanently impacted.  While each were properly insured and those insurance policies covered ALL of the surface risks that each of the organizations had identified, one company thrived in the aftermath, opening their doors months prior to their competition and growing at an unprecedented level that they are still reaping the benefit from today.  The other organization; however, never again opened their doors.  How could this be if the both organizations were properly insured and each of their policies paid out at the maximum level?  The answer – one of the organizations had taken the time to properly walk through the process of  the potential risk of a ‘Katrina-like” event, and the other hadn’t. 

The good news is that this key difference between organizations who  have it together and those that don’t is a simple one to recognize and even implement.  The first step is asking the right questions about what risks are both on and under the surface.  By doing so, each organization can be well on their way to success and swagger and event being a ‘trendsetter’.

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“It’s trendy to proactively identify risk and have a plan in place when risk becomes reality”

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