The "Blissful Ignorance" of Risk
I am amazed at just how many business operators I chat with who are very confident that they have all their risks covered and firmly under control. Risk management is also seen as largely common sense and that a once off or ad hoc risk assessment or review type exercise will more than suffice.
These business operators believe that they are adequately "managing" their known risks and as such do not need a formalised risk management process. In many cases insurance is seen as the "protect it all" backstop. Many also believe that their businesses are largely immune to other risks.
Their "universe" of risks is also extremely limited to those areas they are comfortable with or are directly exposed to. In most cases this is very narrow and covers largely their core operational risks and general financial control. Critical areas such as HR, IT, disasters/catastrophes, liquidity, bad debts, accidents/ injury to key staff, business continuity, partnership/ co-shareholder risk, supplier risk, health and safety issues, regulatory, reputation, environmental, sustainability, concentration risks, socio-economic and strategic risks are not or barely considered at all.
These peripheral and non core areas albeit with a lower probability of occurrence, receive no or very limited focus despite the potentially serious financial impact these risks could have on their businesses.
In most cases the owners or sole proprietor are also the only parties in the business who have the complete "risk knowledge". Risk management is not a formalised or documented process, no other employees are consulted nor is risk responsibility cascaded to anyone else in the business.
I call this style or state of risk management, "blissful ignorance".
Risk management cannot unfortunately be so “dumbed” done or simplified, no matter what the size of a business. Risk management should never also be a once-off exercise but has to be a continuous process of adaption and improvement.
Risk awareness and risk management is not about making business operators paranoid about risk and stopping risk taking, but it is about creating awareness of unknown risks, those that haven't been thought about or contemplated and quantifying their possible impact thus enabling informed decision making. Risk management is largely around quantifying the unexpected, unlikely and unknown.
The reality is that markets are continually changing, consumer demands are changing, disruption is everywhere, technology is changing, we are faced with cybercrime and climate change, the world is changing and with this, risk. Re-invention of a business by its very nature creates new risks.
DottRisk will help business operators by not only bringing about a dynamic robust risk management process but will also radically expand their vision of risks and the potential risks they may be unconsciously exposed to.