Do You Know Your Organization’s Potential Land Mines?

Where are the risks to your organization? What factors are you not thinking about that could damage your operation, your repute, your brand, or your customer’s perceptions of you?

As a leader, you need to think this through.

Once you’ve established a list of internal vulnerabilities (loss of key talent, leaking of confidential data, loss of critical information systems and technology) and external risk factors (natural disasters which damage infrastructure, significant events which damage reputation), formulate plans for each that:

1) detail and implement preventive action to decrease the odds of occurrence

2) carefully plan contingent actions to curtail greater damage if the worst-case scenario happens.

As noted management consultant Alan Weiss points out, preventive actions are almost always less expensive than contingent ones.  A look at the damage—-in finances, in repute, in branding—–that News Corp has sustained in their recent phone hacking scandal bears this out.

Insurance companies have made a fortune out of playing the risk odds.  But it’s generally not smart to gamble on something so important to your company’s future. A recent Wall Street Journal article (“Most Overlooked Risks”, Jan 12, 2012) reported that 80% of the worlds largest companies have reported a major reputational blow every five years, with a corresponding 20% decrease in shareholder value.  Unexamined risk, in an era of unprecedented globalization and lightning fast communication, can be fatal.

Considered risk, on the other hand, can be managed.  And it should be, in any company that wants to thrive in an uncertain and changing future.