Business Changing

Profit and Growth Specialist

5 ways to reduce risk in your business

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By Zac de Silva, principal of Business Changing, originally written for the December issue of the Chamber of Commerce’s Innovate publication, p37: read that HERE.

 

The problems that plagued Fonterra recently were well publicized. Our biggest dairy company took a real hammering – it was a nightmare situation that would have brought a smaller company to their knees. And it could happen to any of us, which highlights how important it is to get the right culture and systems in place to manage risk in your business.

 

Ignorance is not bliss when it comes to business! The biggest learning we can take from the Fonterra scenario is that you want the information flow on the not-so-good aspects of your business to be immediate, while the issue is still small and manageable and able to addressed today, rather than tomorrow.

 

So how do you do this? Here are the 5 best ways to reduce risk in business:

 

  1. Have a culture of openness. Your employees should be able to give full and frank feedback, knowing that their thoughts and concerns will be considered – and they won’t have a black mark against them because of it. A client and I made this a formal arrangement in their business and called it “The 11th commandment” – being able to say anything to anyone in the company… so long as it is constructive. As a result, the team have grown wide shoulders and actually want feedback.
  2. Encourage a culture of continuous improvement. Get everyone in the business thinking “how can things get better around here?” so that they’re constructively considering how they can fix things that are not up to scratch. This is obviously far preferable to having unengaged staff who just continue on as-is, even though they can see there is a problem just waiting to happen. Also, when you come across an issue it’s common to do “root-cause analysis” in order to fix it so that it doesn’t happen again – why don’t you do a “root-cause analysis” on things that could go wrong? That way you’ll fix potential issues before they actually happen.
  3. Have a culture of accountability. If everybody knows what they are accountable for and truly lives and breathes their accountabilities, they are unlikely to stuff up. If they take their accountability seriously, they’ll be regularly critiquing what could go wrong in their areas of responsibility and doing something about it so the worst never happens. Back to point 1, if you have a culture of openness, you’ll find others will tap you on the shoulder to remind you when you are not living up to your accountabilities, further keeping your eye on the ball and working to reduce those risks.
  4. Systems are best practice. Obviously you need to have robust, ever-improving systems that are followed, full stop. Make sure that the systems are not a secret – having systems in place but people not knowing them is a waste of time. There are some great software systems out there, like Promapp, that help you document systems in a user-friendly way and also help with risk management.
  5. Remember that everyone counts. This ties into points 2 and 4 – if everyone knows that they are welcome and encouraged to put forward ideas to improve and also give feedback on areas where current systems might not be up to scratch, the brain power will be immense in improvements and risk management. Even the most junior person in your business or team will have some great ideas that you need to seriously consider.

 

Take the time to look at your business and think about what you can do to improve your work culture and systems in order to avoid nasty surprises (or at the very worst, find out about them while there’s still time to react). Touch base with me if you would like a hand with this or some business coaching. Zac de Silva, Business Changing, zac@businesschanging.com

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