Are You Fighting Fires or Managing Risk?
Think cause-effect when implementing growth plans
"A little risk management saves a lot of fan cleaning." - Stephen Seay
Planning for growth. While none of us are thrilled with the rate of economic growth coming out of the recession, there is no denying that the economy is growing, especially in manufacturing. As employment and consumer confidence pick up, we believe there will be sustainable growth.
As your company continues to grow, there is a natural inclination to move as fast as possible to make up lost ground. However, if you don't focus on managing risk, you may find yourself repeating sins of the past. Don't get caught fighting implementation fires because you didn't spend enough time thinking about future problems.
To manage risk, think rationally. Future plans, projects and actions will always be susceptible to problems. Mr. Murphy confirmed this long ago: "If anything can go wrong it will." But we don't have to let him have his way. An understanding of cause-effect thinking and using a time-tested problem prevention process will help you achieve the growth you've planned and worked hard for. Follow these steps:
- Identify the risks associated with your growth plans by asking yourself what could go wrong. Focus on new, untested or untried products, as well as your services and your customers. Make sure you address your internal operations as well. Postulate potential problems in a cause-effect relationship: "If this problem occurs, this will be the effect on our operations, customers, etc."
- While we would like to address all potential problems, time and other resource constraints dictate we should focus our risk management efforts on the high-priority potential problems. Consider the seriousness of all the problems you name and then calculate the impact on your growth plans, services, products and customers.
- Next, determine the causes of potential problems. Ask, "If this is the effect we want to avoid, what could cause this potential problem?" List all the causes you can think of. Tap into the best thinking of your employees.
- Once you know cause, it is much easier to be proactive and determine what you can do to prevent the potential problem from occurring. Execute preventative actions to eliminate the cause and be sure to identify the resources you'll need to implement the preventative actions.
- Finally, since we know the best laid plans can go astray, plan the actions you will take to mitigate the damage caused by the problem if it does occur. How will you get back on course and sustain growth?
Problems avoided = growth achieved! Protect your growth with this simple, yet powerful, risk management approach. You'll be able to take the savings to the bank.
To Manage Risk, Think Ahead
What could go wrong with the plan or action? What are the potential problems?
What is the seriousness & Impact of the potential problems?
What are all the causes of the potential problems?
What can we do to prevent the potential problems from occurring?
What will we do to mitigate the risk if the future problems occur?