Unfortunately, the past isn’t necessarily that useful or reliable in helping us to predict the future. Just because a particular risk hasn’t yet come to fruition doesn’t necessarily mean that the risk isn’t there. On the other hand it doesn’t mean that it’s imminent. The thing about unexpected events is that, by definition, they’re unexpected. The reality is that only we, as business managers, can decide whether a particular risk is acceptable to our business.
Some of the risks in the list on the previous page are largely beyond our control, because they are due to external forces, such as nature or changes to the political or economic environment. While that may be true, it’s interesting to note that many of the risks listed are down to the actions of people, with very few “natural” events and relatively few external influences over which we have absolutely no control. It’s a sad fact that when we introduce people into the equation things often go wrong. Because, people being people, they sometimes do unexpected, dangerous or even stupid things; they don’t follow processes; they cut corners; they make mistakes.
However, in many ways this is good news. Clearly we normally have little or no influence over natural events, the political or economic climate or the legal or regulatory environment and can only really take steps to mitigate their effects (for instance we can’t prevent severe weather from happening, although we can choose not to locate our business premises on a flood plain). However, in many cases, it is possible to do something to prevent or reduce the likelihood of the man-made risks occurring in the first place.
Case study
A manufacturing company fell victim to an industrial sized version of the well-known tarmac scam, whereby someone in a fluorescent jacket knocks on your door, tells you that they have some tarmac left over from a job they’ve just finished, offers to patch up your driveway and, if you’re naïve enough to agree, presents you with a large bill for a poor quality job.
The upshot for this company was that a huge amount of management time and attention was diverted into resolving the problem and they ended up paying out a small fortune in legal fees.
The root cause was the fact that procedures – in this case the purchasing procedure – were not adequately communicated and had not been adhered to.
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