How do you move from chaos to success and master risk management? Leading through change during times of uncertainty can feel like flying without a safety net. Yet, in these moments, an effective risk management strategy becomes more crucial than ever. So, why does risk management matter so much when faced with uncertainty? Let’s dive in and take a look.
Preparing for the Next Crisis
In today’s rapidly evolving business landscape, organizations that thrive amidst disruption are the ones that proactively prepare for it and actively manage it when it hits. Instead of waiting until a crisis strikes, hoping the worst-case scenario doesn’t happen, forward-thinking boards, leadership teams, and owners take action to fortify the company beforehand.
Unfortunately, many businesses only start considering crises when they are already in the midst of one. And by then, it might be too late.
High Risk Into High Reward: Succeeding in High-Pressure Environments
When managing risk, carrier aviators have it down to a science. With zero tolerance for error, we rely on every crew member, regardless of rank, to work as a team. The key to establishing a culture of innovation, and risk management, is the ability to focus on what matters during times of change, to adapt and thrive.
To be well-prepared for any season of turmoil, leaders can concentrate on three critical areas of action: defining what success looks like, developing realistic scenarios, and planning effective, clear communication.
Risk Management: Know What Success Looks Like
On the carrier, with clarity of vision and purpose, we all knew what success looked like and understood our role in making it a reality.
Whether your team is launching planes, providing multi-cloud managed services, data analytics, healthcare to thousands, or financial services, you must step up and provide the vision that empowers the team to achieve high performance.
The very essence of leadership is the ability to create a picture of success and bring people toward it.
Three of the most significant risks right now to your organization, regardless of industry, are:
- Continued disruption to your standard business model.
- Burnout on your team.
- Your team’s resistance to change.
Be Clear With What You Want Your Team To Accomplish
- What are the things that your organization is trying to achieve?
- What are its core beliefs?
- Who are your key stakeholders (and who will be most affected by your decisions, both good and bad…)?
- What resources do you have available?
- What’s the regulatory environment?
- What’s the competitive environment?
Once you understand the answer to these questions, you can start to think about the types of risks that are most likely to impact your organization’s ability to achieve its goals.
Introduce Scenario Planning: Navigating the Unknown
When navigating uncertainty, having a clear path forward is crucial.
This is where scenario planning comes into play.
Boards, Owners, or the C-suite must push their leaders to develop business plan scenarios that outline potential paths out of a crisis. While long-term strategies are essential, leaders and decision-makers should give special attention to the immediate term.
Well-defined plans include key initiatives, milestones, resource allocation, and threat management. All assumptions should be thoroughly examined and pressure-tested (we call this red-teaming.)
Ready Your Crisis Communications: Clear and Cohesive Messaging
Communication is the lifeblood of teamwork, and once again, it’s you, the leader, who sets the tone for the whole team. Of course, part of your job as a leader is to define and communicate your organization’s strategy clearly – but a fearless leader speaks in a way that inspires those on your team to remain fully committed.
Risk management 101: Effective communication is the glue that holds organizations together in times of crisis.
A well-prepared crisis communication plan can counter misinformation, flexibly use multiple channels, and maintain consistent and clear messaging.
In the heat of battle, we often completely shut down and dismiss everything but the task at hand. Unfortunately, this can have a devastating effect on your team.
Communication breakdowns are at the root of many organizational problems. Of course, your teammates need to be informed, but they also need to know you care enough to communicate with them in a timely fashion.
Leaders who can pair excellent communication skills with a positive, hopeful outlook are much more likely to have a team that works well together, feels it can reach its goals, and is willing to invest the time and energy required to turn the strategy into reality.
Identifying potential communication pitfalls will help avoid confusion or incomplete messaging that may disrupt business operations.
Prepare, Perform, Prevail
Waiting for a crisis to hit is not an option.
You can have the grandest vision ever, but if you can’t execute effectively—if you don’t have a plan for doing something—then all that effort is worthless.
Boards, leaders, and owners should proactively prepare their organizations for the unforeseen and empower their teammates to build a robust market disruption toolkit.
Implementing effective risk management strategies, focusing on what success looks like (mission, vision, and values), scenario planning, and crisis communications are the key to successfully navigating uncertain times.
As leaders, managers, and entrepreneurs, it is our responsibility to take action now to ensure our organizations and teammates are ready to face any challenge that lies ahead.