Risk
We help boards to deliver long-term sustainable success by improving
their understanding of risks and behaviours that leave directors exposed.
The field of risk management is evolving to meet the challenges of today’s highly volatile business conditions. It can be difficult for non-specialists to remain current. We keep up to date with latest thinking and its practical application in boardrooms.
Resilience informs everything we do
it’s a way of thinking like an innovative engineer understanding the dynamic nature of business building in redundancy designing in modularity embracing innovation ruthlessly eradicating inconsistencies accepting that failure and change are inevitable reconciling conflicting priorities growing capabilities listening to a variety of views of the future responding positively to challenge making evidence-based decisions being insatiably curious constantly asking “why?” constantly asking “why not?” being alert to any evidence that is not what you expect it to be
it’s a way of thinking like an engineer building in redundancy designing in modularity embracing innovation ruthlessly eradicating inconsistencies reconciling conflicting priorities growing capabilities responding to challenge being insatiably curious constantly asking “why?” constantly asking “why not?”
The Resilience Grid
The Resilience Grid was developed in 2020 by ten experienced directors brought together by Resilient Corporates under the chairmanship of Stephanie Shaw MSc, with support from Steve Giles, Ian Beswick, Fiona Larg, Dr Deborah Benson and Dimitrios Hatzis.
In her day job, Stephanie led the Civil Aviation Authority’s new Regulatory Approach, including the development of the blueprint for the CAA Academy to create learning pathways, professional excellence and subject matter expertise.
Relying on risk registers
Directors have been seduced into relying on risk registers with matrices based on increasingly complex versions of probability and impact assessments, but there is a fallacy of probability in most of these models.
In Radical Uncertainty, John Kay and Mervyn King present the challenges well known in every boardroom, how to make decisions for an unknowable future?
Risk is not uncertainty
Uncertainty needs different thinking, because neither the impact nor the likelihood can be forecast. Probabilistic thinking works best where there is a defined range of outcomes and you have a sufficiently large number of occurrences on which to base a distribution curve.
Choosing the appropriate technique
Establishing the nature of the risk and the likely timing of the risk are the first steps in deciding the appropriateness of the technique selected. Is the risk known or unknown, is the timing known or unknown?
How we do this in practice
Have a look at the Project Pioneer case study and let Iain tell you what he thought of our approach to risk.
Pioneer required additional working capital to expand its US operations.
Challenges
- Acquiring additional growth capital
- Managing stakeholder expectations
- Clear, timely, accurate and forward-focussed measurements
Insights
- A deep dive into the futureproofing of Pioneer’s business model revealed that the directors were overlooking an existential risk.
- Post-Brexit trading patterns and post-pandemic debt burdens emerged as the fundamental challenges to reaching the goal.
”The input of the Resilient Corporates team really helped us focus on the icebergs beneath the surface. With their input we realised that we were facing an existential risk. We were so focussed on post pandemic recovery we missed the change in trading patterns which, if left unchecked, would have led to insolvency. We were in uncharted waters and the Resilient Corporates team made us aware of the Safe Harbour regime, which can protect directors from inadvertently becoming personally liable for corporate debts. Resilient Corporates helped us find appropriate restructuring specialists to safely pilot us through those choppy waters. The early identification of the going-concern challenge was vital to us being here today and we are certainly more attentive to understanding medium term risks. The thing that most impressed us about the Resilient Corporates team was their commitment to truly understanding the complexities of our business. They are experts in finance and governance, but it’s our business challenges that really interested them and they remain interested in our progress long after their work with us finished. They are a fantastic resource to have in your wheelhouse.
Iain, the CEOProject Pioneer
