By Jim Woods
As I think of risk management as a concept the great companies are really planning for uncertainty. Risk is about how to deal with uncertainty and complexity. Risk is volatility. If you think in terms of when anything happens, people are always planning. The big part of any planning process is to anticipate uncertainty. If you can understand uncertainty then you can pick the best avenue as opposed to being left unaware.
If you understand your problem and the impact uncertainty can impose on your problem in the future then you are taking the best action possible. For most organizations uncertainty and complexity are viewed as annoyances rather than opportunities.
Every organization needs to plan their operation in the future by planning for uncertainty and complexity. They have to look at the unknowns. 1 or 2 “What if’s” might happen.
At The InnoThink Group we currently deploy strategies to enable our clients to exploit uncertainty and complexity as a competitive advantage. Jim
Here’s five core components of resilient systems:
1. Diversity. A company is clearly more at risk if it has just one major product, service, technology, key supplier, or other core element. Create more diverse options for sourcing key inputs.
2. Redundancy and buffers. Having multiple pathways towards important results can actually increase revenues if it means operating when competitors can’t. Except that something unusual happens – usually.
3. A love/hate relationship with risk. It’s a paradoxical idea, but one way to build resilience, or antifragility, is to keep the vast majority of the business as safe as possible, but then take big risks – ones that may pay off 10-fold or more – with a smaller part of the business.
Think of disrupting or cannibalizing your own business before someone else does.
4. Fast feedback and failure. If you’re going to take some risks to, ironically, make us less risky, you need to drop what isn’t working quickly. To be more responsive, companies need better data on resource use and climate risks up and down the value chain. So invest in capturing information and building real-time systems.
5. Modular and distributed design. If some part of a system fails, it would be great if it didn’t bring down the rest of it. via Why You Need a Resilience Strategy Now – Andrew Winston – Harvard Business Review.
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Jim Woods is a leadership development and training consultant deploying his unique abilities in character based training and strategy.
Jim is president of InnoThink Group a human resources and leadership management consulting firm | Skype ID – jim.woods79 http://www.innothinkgroup.com Click here to schedule an appointment.m. He has an absolute passion for people development and are constantly refining and adapting his programs in order to ensure that they have the maximum impact on those we serve.