Andrew Marsh, chair of Vistage for the North East and Northumberland, Chair and NED for numerous boards, businesses and charities; and successful entrepreneur in his own right, has committed to imparting his knowledge to help business leaders excel and have a solid view for the future
Here, in his latest article, Andrew highlights different approaches to risk, and how a good board will focus on what pro-active opportunities can arise from risks.
“It’s a bold statement to make but I believe in every risk, there is opportunity. In this article I am going to separate managing, mitigating, responding to and proactively being prepared for risk.
“A risk is a possible problem, but one that hasn’t happened yet. An issue is a risk that has happened. The prior should be treated strategically, and the latter is an operational action to deal with. One of the main risks every organisation faces is single points of failure or capacity … be that key staff leaving unexpectedly, illness, being let down by a supplier or lack of customers. Every company should have a robust succession plan, flexibility to back fill and pivot roles; and have a diverse approach to recruitment and how roles can be quickly created. They should also have a focus on what could cripple the organisation if it fails or isn’t available, and proactively look for ways to avoid them.
“As well as being proactive to potential manpower, supply or customer issues, a good board should be aware of all potential risk within a regularly updated risk register, conducting regular war gaming and building actions into strategic plans so nothing is a surprise if it becomes an issue, unless it is something completely unprecedented in our lifetime, like a pandemic the size of which we have just experienced.
“Companies that have a good productive paranoia and constantly ask themselves “what if…?”, are pro-active against risk instead of re-active. For example, those who took governance and operational security seriously were more organised to cope with the pandemic than they originally thought, as they had a plan in place for the operational team to trigger – it was a case the executives visiting their business continuity plan and activating their crisis management plan to deal with media interest if necessary.
“This highlighted a need that more and more senior leaders in operational roles should have the strong management of risks and handling them when they become issues built into their KPI’s. But this mitigation of an issue means little other than survival unless you take it one step further as a board.
“It needs to be acknowledged that board risk is different to operational risk – yet far too many still focus on operational matters. A board type risk example is that the revenue streams are too reliant on one customer set, being an uncompetitive organisation in the marketplace or being aware of Government regulations that could change market opportunities and the company dynamic by reducing potential and margins.
“Risk is about asking questions about the sustainability of the company and not just reviewing details provided by the Executive. It’s about thinking across different time horizons not just looking short term.
“Strong non-executive experienced professionals should take every risk and look strategically for avenues of opportunity. How to pivot, how to be more digital, how to launch new services, how to find new fiscal routes, how to improve governance, a restructure; and by looking at trends and emerging needs this team are suddenly able to create an exciting new future for the company. Risk Management is about value protection, but used properly it can deliver value creation by seeing a situation so it avoids issue before it occurs, or that means an issue can be handled easily, moving onto plan B.
“A great example of this is Cascade Cash Management. Cascade delivers the highest returns for savers and when the interest dropped below zero in the last two years, the team brought forward the importance of another offering – greater depositor protection. The team is passionate about savings and delivering the best possible outcomes administering funds on behalf of clients providing direct and independent access to providers to the tune of over £1bn so far.
“The CEO and co-founder, Dr Emma Black, also brought in a focus on how they could be a true business with purpose, and the team have now launch a number of options to help people reach their savings goals faster, smarter and happier. Cascade is expecting this year to be the first of similar companies to reach profitability they can re-invest for the good of their team, partners and customers.
“Within Vistage we work on mindset with business leaders, that encourages them to have the mentality of opportune approach. Someone who is glass half empty will focus on putting the issue right, someone glass half full will expect others to sort that while they work out how to move forward pro-actively.
“A lot of that pro-active approach is being able to stay calm, looking to the future and trusting others. A lot of it is having a pro-active approach to digital change and embracing in advance. One example of this, is around compliance. There are solutions out there that mitigate risk on collecting data, looking after people and health; and remove one vulnerability created by employees not performing properly.
“Initially technology equalled threat to the ‘normal way’ of doing things but when forecasting risk, innovation can divert disaster, and every day technology is proving its worth more and more. It can provide a solution you didn’t know you needed, until you had it, so is a great way for boards to look beyond risk to potential. “Plexus Innovation’s GUARDIAN® is a superb example of this. GUARDIAN® function includes measurement of temperature, CO2, humidity and water system monitoring and control, enabling insight driven decisions, reliable compliance reporting and alerting to health risks or failing assets that otherwise may not be known about. It’s a new way of doing things, but it is proving its validity and unerring performance every day, with executive and non-executive teams reaping the benefits across a range of industries as they averting risk with it in a number of challenging business areas including compliance, manpower, cost and environment.
“In conclusion, risk can be something that teams panic about. If dealt with inappropriately, the issue can be catastrophic. However, it is something every company faces and if dealt with right pro-actively, in advance, a multitude of positive opportunities can be sourced to allow organisations to thrive.
