Risk is a part and parcel of business; the uncertainty of the
future, and the vagaries that this uncertainty causes in the business situation
is one of the key aspects of planning at any level in an organization. The
current book under review is my first book on Risk Assessment that I have taken
up, in my attempt to understand why plans fail, and what is the nature of risks
confronting an organization. Before I commence, let me underscore something –
we in Organisations as well as in Management Education should place a lot more
emphasis on understanding and evaluating risks than we do now.
THE BOOK
Risk
Management – A Practical Guide by Sorin Dumitrascu
is a practical approach, a guidebook of sorts, towards identifying and
implementing Risk Management Procedures. This looks at a very basic approach,
yet eminently practical. It introduces in a very succinct summary form some of
the types of risk that confront an organization, in a basic bare categorization,
and then moves on to the methods with which we can identify risk, through
various techniques like Brainstorming, Checklist Analysis, Delphi Technique
etc. It then look at capture movement on these paradigms, like FMEA, Annual
Loss Expectancy {which is the only I have used professionally}, Opportunity
Analysis, etc. It then closes with a smallish section on dealing with these
risks
THE REVIEW
Risk is a fundamental aspect of any business; thus, it is somewhat
of a surprise that I have never come across any training, any KRA buildup, any
knowledge sharing, any planned interventions around risk assessments in my
entire career. All the training I have done in Risk has been my personal
self-education. Ideally, this should start at a very basic level for the Senior
Customer Facing Field Executives / First Level officers in other departments,
and should be a mandatory aspect from the Area Manager level onwards. It should
feature as a distinct KRA at RM Levels in all departments. It doesn’t, for the
most part – is it any surprise, then, that 90% of all products launched fail?
This book is a good start if you, like me, have some awareness of
the risks that can confront an organization. Ideally, a more thorough grounding
will increase take-aways from it, but some awareness is enough. With that in
place, you begin to relate these techniques to real world scenarios; I was able
to place the utility of Brainstorming to a real world threat that was ignored;
we RSMs escalated a small market change in a meeting, and left it at that. 6
months later, this change exploded into a deep threat to our 3 key selling
products.
Perhaps a brainstorming session would have helped in this
scenario, followed by the FMEA approach that identifies & prioritises risks
in various parameters. Clearly we would have foreseen the risk to the biggest
product lines in this combination of techniques! This example also highlights the key challenges that this theoretical
framework poses : namely, identification of, and prioritization of risks,
can deteriorate into an opinion based approach, wherein personal opinion of the
managers superimposes business realities. Again, we find hints at how to solve
this : The Delphi Technique can be of immense utility in such a scenario with
its experts based approach. Thus, the learning is that Risk Management is essentially
a process, wherein you have to design a framework that suits your business
reality.
In conclusion, this is a book that sets your brain-juices flowing,
gets you to think and apply your learnings in a real world setting, as it is a
practical guide. It is by no means a comprehensive
resource towards Risk Management – it leaves aside a couple of major risk
aspects that I could spot. First, it would have been better if a deeper look at
the types of risk {Commonly : Financial, Strategic, Operational, Hazard} the organization
gets faced with was undertaken. Second, the most dangerous risk – Strategic Risks
– well, what if the current teams and
experts etc fail to suppress their opinions, and fail to spot the
undercurrents? It is the undercurrent
of now that becomes a risk of the future. And precious little has been on
this, right from the times of John Maynard Keynes, who in his The Economic
Consequences of the Peace in 1920 identified undercurrents in Europe – and was
ignored…
Comments
Post a Comment