Anticipating and managing risk: tips from a three-year-old

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On a recent family holiday I introduced my three-year-old niece to The Lion King. She had an outline of the story from a book, but I had the DVD. This was a big deal. The three generations of us (mum, sister, niece) sat down to watch it. My niece watched the film intently and afterwards had a lot of questions, namely to do with the death of Mufasa (who was thrown off a cliff by his brother, Scar). The conversation went a bit like this:

 “Why did Mufasa die?” – “Because he fell off the cliff”

“Why?” – “Because Scar pushed him”

“Why?” – “Because Scar’s not very nice – he was jealous”

“Why?” – At this point, I started to wonder how much you should tell a small child about the complexities of family dynamics. So the answer was pretty much “he just is”.

My niece chose to believe that Scar was an unhappy lion and that his mummy would come and find him and make him better and happy again (not that he got killed by hyenas!) and everyone would live happily ever after. Fair enough – she’s three.

But adults running charities need to be able to answer the ‘Why?’ and ‘What if…?’ questions. We know that there is increasing pressure (and rightly so) for transparency and accountability, but in addition to these external drivers, if you can answer these questions, your organisation is better placed to:

  • learn from the past (‘Why did X happen? What could we do differently next time?)
  • anticipate challenges (‘What if X?); and crucially
  • develop responses to anticipated challenges (‘If X happens, we will Y’)

My experience is that we’re pretty good at learning from the past to inform decisions – particularly in fundraising, where past behaviour informs future asks – but we could perhaps be better prepared for anticipating future challenges, and crucially, how our organisations will respond to them.

My overall thought is one of being able to respond, not react.

Here are some further thoughts on anticipating and managing risk at strategic and operational levels.

Strategy development and scenario planning

Creating and delivering a strategic plan is difficult for various reasons, not least because of the difficulties of setting the path – the key activities, not just a goal or vision – that will be relevant and appropriate in the environment in three or five years’ time.

Many of the strategy documents that I’ve read include analysis of the external environment (usually PEST or PESTLE analysis) to anticipate what context the organisation will be operating in, in the future. Plans are put in place based on this anticipated environment and corresponding risk registers are developed. Good stuff.

Scenario planning takes this a step further by identifying other possible futures. For example, with reduced funding for the arts, arts organisations may want to consider two futures: one with the continuation of funding and another where a core funder withdraws support. Campaigning organisations will hopefully be considering how they will operate after the General Election, developing hypothetical organisational strategies/ responses based on the possible leadership.

Knowhownonprofit has a good guide to scenario planning including an outline agenda for running a workshop on it. It’s written by Caroline Copeman and is rather excellent, hence I won’t go into the detail here – but here’s a brief introduction:

Firstly, create your ‘axes of uncertainty’. These axes should show the best and worst situation in a given scenario. Let’s consider a (hypothetical) hospice in a specific region:

  1. a large volunteer base enables it to be wide-reaching and provide a high standard of service;
  2. a significant proportion of its income is from one funder.

These are possible axes that the hospice might want to consider:

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By doing an exercise like this, you will be able to respond better to changes rather than having to react to them. Imagine a pendulum swinging: it will always travel the same path unless it is hit by an external force – if hit, its path will be disrupted it and it is then impossible to know where it will travel. In simple terms, scenario planning helps you to prepare your organisation’s response to being hit sideways.

Operational management – plus, minus, interesting

At an operational level, developing and managing a risk register is really important. By understanding your risks, you can plan to avoid, mitigate or accept them.

Operational risks might be that a celebrity doesn’t turn up to your event, there’s a complaint about a street fundraiser, or the Daily Mail might just have a pop at you. A good risk register (not included here as I’m sure you’ll already have them) developed with other people – not just a project manager – will help to identify such risks but the task sometimes feels a bit of a chore and allocating weightings to probability and impact can feel a bit arbitrary. To be clear, I’m not saying that you shouldn’t do it – you should – but here’s something that you could use to supplement it.

Plus, Minus, Interesting is traditionally a creative tool to help you work out if an idea has legs or not. It draws out the pros and cons, but also the unintended consequences – and when you understand the implications of these unintended consequences, you can manage them or choose to avoid them by doing something differently.

Here’s a brief overview of the tool:

  1. Define your idea or activity: e.g.
  2. Create three columns on a flipchart:
    • plus (pros)
    • minus (cons)
    • interesting (other things that happen as a result of the idea or activity – by-products)
  3. Give each thing that you write in the columns a weighting: + in the plus column, – in the minus column, and +/- in the interesting column
  4. Add up the scores and you’ll get a sense of how the pros and cons balance out, which may inform whether you choose to progress the idea or activity
  5. Now look at the things in the interesting column; pull them out individually and start to consider what the implications are and what your response could be to them

It’s in step 5 where this tool becomes really useful, because you start to consider other possible scenarios – as with scenario planning – and it puts you in a position of being able to anticipate, and to a certain degree, manage these scenarios. Try this exercise the next time you’re creating a risk register; use it to supplement your usual risk register planning and see how it works for you.

To sum things up, the repetitive questions from my niece were a good reminder that we need to remain inquisitive and aware that things might change any day. For some people, change isn’t welcome (you know the ones – “we tried that in 1994 and it didn’t work”) but leaders need to be anticipating and shaping change, not playing catch-up.

So next time you’re doing some strategic planning, think about asking some questions – repeatedly, if necessary – like my niece did about the Lion King and you might uncover some new thinking. Alternatively, you could take her approach to Little Red Riding Hood, which is “I don’t read that any more – it’s really sary (scary)”. But that is not what I’d recommend.

 

Fancy something delicious and not nutritious?

Gin and tonic sorbet

My colleague Dave sent me this one and I intend to try it over the Christmas break. Sounds like an excellent alternative to more Christmas pudding. Dave suggested that you “should be careful driving afterwards” and by that I think he means don’t. So don’t.

Ingredients
6 oz castor sugar
pared zest and juice of 2 limes
¾ pint of water
6 tbs gin
3/4 pint tonic water (not slimline)
fresh lime and mint to decorate.

Instructions
Dissolve the sugar in 3/4 pint of water over a moderate heat. Stir in the lime zest and juice and boil for 5 mins to reduce. Set aside to cool, then strain into a freezerproof container and stir in the gin and tonic. Freeze straight away until it is slushy [add another slug of gin here if you fancy it], then beat and return to the freezer. The alcohol prevents it from freezing hard, so just before serving, spoon it out and decorate it with a slice of lime and a mint leaf. Refreshing.

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