Why Your Business Is Being Left In the Economic Dust: Nimble Risk Management During Uncertainty
- Written by Glenn Ashe, CEO and Co-Founder, Anchoram Consulting
Agility and adaptability are quickly moving from distinct competitive advantages to business necessities, with those stuck in stagnation simply unable to keep up with the pace of this new business environment.
From the pressures of inflation and supply chain disruptions to constantly shifting regulations and customer expectations, businesses often find themselves trying to keep up with external risks that move faster than they can respond to. For many of these businesses, the frameworks they have in place for external threats are either neglected or simply out of date and crafted for a slower and more predictable business landscape.
Tomorrow’s risks cannot be managed with yesterday’s playbook, with countless businesses across the country finding this out after it's too late. Leaders must manage proactively, acknowledge that risk should be treated as a ‘when’, not an ‘if’, and implement systems that emphasise flexibility.
The Failure of Traditional Risk Frameworks
Traditional risk management has always been built around predictability. Identify potential threats, judge their likelihood and impact to implement responses. This era of predictability is certainly not the environment that businesses operate within anymore, with conditions potentially able to change overnight. The frameworks many organisations still use are simply too rigid to keep up, relying on assumptions of stability that simply are no longer true.
It’s easy here for businesses to trick themselves into a false sense of security, with boards and executives often content with the traditional boxes being ticked as a job well done. However, those lacking the ability to read and respond in real-time will be exposed in ways that their archaic systems simply won’t flag.
Agility As a Team
Agility doesn’t mean abandoning structure completely. In fact, true responsiveness depends on having the right systems in place. It means that all departments in an organisation are working collaboratively, with processes designed to allow decisions to be made quickly, without waiting for a quarterly review.
Rather than treating audits around these systems as tasks to be completed in isolation, include all relevant departments to ensure the business is aligned in its strategy. Doing so creates a shared understanding of risk across the business, enables better and faster decision-making, and allows businesses to respond faster to threats as they arise, with greater accuracy and confidence.
Scenario Planning is Not Optional
Forward-thinking organisations are building multiple “what if” pathways into their decision-making. They’re testing key areas of the business against potential disruptions and pressure points as well as triggers for action long before those risks materialise.
Scenario planning also helps shift mindsets. It forces leadership teams to confront uncomfortable possibilities and break away from the day-to-day, allowing teams to map out the proactive responses that will guide how the business reacts to threats as they come in.
Culture is the Differentiator
All the systems and frameworks in the world won’t deliver meaningful change without the right culture to support them. A truly agile organisation certainly has good tools, but more so its one where people are empowered to act, to flag risks early, and to escalate issues without fear.
This requires leadership to encourage this train of thinking, and must be a mindset coming from the top down. This can be done through rewarding curiosity, transparency, and teamwork, further than simply risk aversion. It also means embedding accountability for risk into roles beyond the executive level, and ensuring that responsiveness is a shared responsibility across the business. Those managing risk for organisations deserve a seat at the top table. This agility isn’t reserved only for startups, it's a mindset that should exist in large, regulated, mature organisations.
The Cost of Inaction
The cost of getting this wrong can bleed from operations to overall strategy. Businesses that fail to adapt may find themselves missing opportunities, breaching compliance obligations, or losing the confidence of stakeholders who expect more than just static reporting.
What’s more, recovery from missteps in today’s environment can be slow and expensive, particularly if trust is lost along the way. Absorbing hits to your business, recovering quickly, and continuing to deliver is a trait shared by the world’s most successful organisations, realising that the ground may not always be stable underfoot.
The businesses that will thrive are those that build responsiveness into all aspects of their business. That means rethinking how they plan, how they manage risk, and how they make decisions. Agility isn’t a trendy buzzword or a luxury for the time-rich, it must be built into the foundation of an organisation. Those that refuse to move will no doubt be overtaken.
