How to Reduce the Risk in Risk-Taking?

Nov 03, 2021
How to Reduce the Risk in Risk-taking?

The difference between Risk and Calculated Risk according to Merriam-Webster is that the degree of failure has been estimated (calculated) before the action is undertaken.  There is still a probability of failure.  However, with calculated risk you have a decent idea of what you are in for should the plan go south. 

 

A senior executive told me early in my career that ONE of the responsibilities of functions like Legal, Finance, Human Resources, Public Affairs and Compliance is to assess and advise on the risk associated with certain business decisions.  Calculated risk is a decision made with the input of these (and other) advisors.  Once they’ve been advised – a business leader can make a decision based on how much risk is associated with that course of action.

 

Risk is inherent in every business decision and as a leader you are responsible for setting the parameters for the type of risk you are willing to take, and the process by which those decisions will be made, and actions considered. 

 

Based on the industry you are in, your threshold for risk will vary.  Based on the size of your company that threshold may also vary. 

 

Some risk is healthy.  It may have a big payoff.  If it’s calculated the negative consequences are reduced.

 

Empowerment

While leading the Guest service contact center at Disney we took a certain amount of risk related to internal procedures.  We would change processes in an attempt to improve Guest satisfaction.  We would add or eliminate processes to reduce Guest service response time.  We always had a measurement plan in place.  Was the change generating the intended results?  Were there unintended impacts we hadn’t planned for?  

 

In one instance the Guest service team partnered with the Food & Beverage team to make a change to the special diets process.  Disney is very well known within the special diets community for providing great care for Guests with food allergies and intolerances.  We took a calculated risk in reducing the number of requests that we put through our pre-arrival high-involvement process.  Our Food & Beverage partners assured us that they were 100% prepared to handle specific allergy needs in their locations as needed without prior notification.  We were able to streamline our process, reduce the volume of interactions, and provide greater service to those more complicated situations that required high involvement pre-planning.  This may have felt like a risky decision, it was a calculated risk.  We ONLY made this change based on the fact that we knew there were processes in place to handle Guests once they were on site.   This was a win-win-win.  Streamlined process for the Guests with common allergies, improved experience for those with more complicated situations and less hand-offs for operations.  

 

My leaders were empowered to make changes through what we would call pilots.  We rarely changed a process permanently without first trying it out to test our hypothesis. 

 

Without empowering your teams – you will not get the diversity of thought that can take your organization to the next level.  YOU will have great ideas – you will not have ALL of the great ideas.   You’ll be amazed at the innovative ideas coming from your team.

 

In the age of self-service there is even space to consider empowering your customers!  For example, a grocery store may feel like they can take the calculated risk to provide a process for self-check-out, but they are not willing to assume the risk to empower customers to buy alcohol through self-service without associate intervention.  

 

Establish guardrails and a process

During that same time, we established a process to review brand threats.  These were topics that would put the Disney brand at risk.  It included what topics needed to be handled through the brand threat process, the process for reviewing these threats and the functions and points of contact that needed to be involved in reviewing and advising on each type of threat.  

 

Brand threat was a Guest service guardrail.  My Cast and Leaders were empowered to handle all Guest compliments and concerns - with the exception of these "brand threat" topics which had to be reviewed through a defined process.  

 

Additionally – the process included an expectation for escalating and addressing very quickly.  These inquiries were about the Guest's experience, someone else’s experience or even about something they read online.  In the age of social media – things move fast!  We had to move fast.

 

Completing a Risk Assessment

When you launch a new or improved process – you’ll want to proactively understand where and how it might fail.   This risk assessment should take into consideration how severe a failure would be, how frequently it could happen, and how likely you are to detect the failure.    This level of detail will help with decision making and allows you to develop counter measures to prevent failures and respond to failures.  You can’t manage risk until you assess the risk.

 

What can go wrong?

This is a tricky topic.  Some leaders don’t think about it for fear of what they will learn.  Conversely, some may think about it too much and it’s easy to get into analysis paralysis.  

 

I’ve been down this path as a project manager.  I’ve been down this path as an operations leader.  I’ve taken my team through a risk assessment; I’ve taken clients through risk assessments.  It’s helps to have someone come alongside you that can push you to think outside the box … to walk you through a process.  You need to get deep into your process, but not so deep that you don’t end up with actionable results. 

 

If you’re thinking “I know I have risk … but I can’t put my finger on it”.  Or maybe you’ve been down this path and not gotten the results you want and need.  Let’s talk – you may be ready for an assessment.  Maybe there is someone in your organization, or maybe you need someone to come in and challenge your team.  Either way – let’s jump on a free strategy call to talk about how you can better identify and manage your risk.

 

About Me:  I'm Heather Havey and being an integrator is in my DNA.  My consulting business helps visionary leaders bring their big ideas to implemented reality.   I’m passionate about efficiency and business transformation, and I will empower you to accelerate the achievement of your big goals.   I offer customized, no-nonsense, real-world solutions designed to position you as the hero in the reinvention of your business.     

Check out options for how we may be able to work together at https://www.heatherhaveyconsulting.com/services .   

And if you think you could benefit from having an expert partner with real-world, action-oriented change solutions that will absolutely work, let’s chat.  In your free strategy session, we’ll get those ideas out of the clouds and onto the road to results.  Schedule a complimentary strategy session to talk about bringing your vision to life. 

 

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