Optimising financial processes

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Something to Consider 1: February 2019

Something to Consider February 2019 – The Positive Side of Risk

The Positive Side of Risk

The respected Risk Management subject matter expert and blogger, Norman Marks, got me thinking (again) this week. He published a thought-provoking blog post on a thorny topic of how we perceive the whole concept of risk.

In the English language, the words ‘risk’ and ‘risky’ have very negative connotations, despite the fact that risk is present in the face of every decision, whether to cross the road, conduct a marketing campaign, engage a new customer, launch a new product or start a company.

“Opportunity” and “Risk” can be seen as two sides of the same coin – the ‘thinking hats’ required to acquire and assess all the relevant information needed to make timely decisions.

I agree with Norman that in an ideal world we would have a neutral word that addresses all uncertainties, that can have both negative and positive consequences. However, the current reality and the English language makes that impractical in my opinion.

Discussions of risk and opportunity are really just another word for ‘decision making’. No good decision is made without considering both the potential downfalls and upsides. Every opportunity requires the navigation of ‘what can go wrong’. Just as every barrier in our path can present opportunities. We even have an old adage “every cloud has a silver lining’. But the reverse is also true. That’s just life!

‘Risks’ cannot be regarded as isolated concepts, but things that can affect achievement of desired outcomes or objectives.

We need to socialise the concept that ‘risk management’, and the consideration of potential consequences/implications, both positive and negative, is a natural part of all decision making. This needs to be applied to all decisions, whether in respect of corporate objectives and strategy, annual plans, new initiatives, new markets, new products, new organisation structures etc.

The priority is in creating a culture where everyone factors ‘risk’ and ‘opportunity’ into their decision making, by considering all the available facts and evidence, not just those elements that support the outcome we desire.

Norman’s full blog post ‘The Positive Side of Risk’ can be read here.

Our ‘Something To Consider’ snippets are framed as small, digestible, ‘dashes of insight’ around the pillars of what we define as “World Class Finance” – Process Optimization, Financial Control and Compliance, and Risk Assurance, all underpinned by technology enablement and integration.