Opportunity & Risk

 

“Yes, risk-taking is inherently failure prone. Otherwise, it would be called ‘sure-thing taking’. – Tim McMahon”

 

It can be a risky job ensuring your business works for you. Of course, you know what you’re doing, or you wouldn’t still be there, but how useful would it be to involve an experienced and confidential outsider into your risk-based thinking process. It can be immensely powerful and that’s why we do what we do.

This time I’d like to share with you some thoughts about risk-based thinking, as the Quality Management Standard refers to it. In the introduction to the Standard, it states: “To conform to the requirements of this International Standard, an organization needs to plan and implement actions to address risks and opportunities. Addressing both risks and opportunities establishes a basis for increasing the effectiveness of the quality management system, achieving improved results, and preventing negative effects.”

 

Risk-based Thinking

Unfortunately, there appears to be no definition of what ‘risk-based thinking’ means and therefore it is open to interpretation. Again, with our involvement we have found that the auditors from the Certified Bodies, tend to fall back on their experience of ‘Risk Assessment’ as used in Health & Safety Management, however, this requires a higher level of assessment than ‘risk-based thinking’ would suggest.

So how can you satisfy the auditors? Experience suggests that some form of documented assessment is required. You may then get a few general questions, but any in-depth discussion relating to your assessment appears to be unlikely in most cases. Your registration should be secure.

If however, you want more ‘bang for your buck’ then you may want to consider the following:

• What is causing the risk (in the case of health & safety risk assessments it is usual to consider the HAZARD). In business terms maybe UNCERTAINTY is a better focus?
• Risk is a product of likelihood  x the consequence of that uncertainty being realised;
• Opportunity is the possibility of an uncertainty providing some business benefit.

Every choice you make will either add to the quality and integrity of your business or detract from it. That is a serious uncertainty and an enormous opportunity. So maybe the next big question is: “Can you ever have an opportunity that does not present some risk?” Answers on a postcard, please.

 

Risk Appetite

Moving on. Now you have established the significant uncertainties affecting your business, you can consider the most likely opportunities and the potential risks. You can also establish your likely ‘RISK APPETITE’ i.e. what can you live with if it all goes wrong.

You are possibly thinking, I do this all the time in my head. Well, that would be excellent. Much better to do this than nothing at all and find your business premises flooded or burnt to the ground, or a potential ‘spiffing’ order lost to your number one competitor. Nevertheless, there are some good reasons to consider adopting a disciplined approach, including documenting the assessment.

Whether you are risk-averse or gung-ho, you may want to contact us on:

Tel:                    01284 330400

Email:               info@performanceplus.co.uk

Web:                 www.performanceplus.co.uk

We work with small to medium size businesses across the East Anglia Region.