Associations: risk it or list it?
Nobody expects the unexpected, but you can at least try and plan for it!
Opening up the building after the Christmas shut down a few years ago I discovered to my horror that over the holidays a small electrical explosion caused by a power surge had burnt out the main fuse box and deprived us of heat, light, switchboard, and computers. Unbeknown to me the argument that ensued about liability between the electricity board, energy supplier, and contractor, would take days to resolve and result in no power for a week, but even at this stage it felt like a disaster!
Packing the staff off for what we thought would be a welcome extra day`s holiday, and thanking our lucky stars the whole place hadn`t burnt down, an intrepid colleague and I settled down in the cold to manage the recovery as best we could; literally and metaphorically fumbling in the dark to resolve the problem.
With year-end accounts to complete and membership renewals in full swing it could hardly have happened at a worse time. But a lucky break came with the discovery of one lone top floor power socket that was unaffected. As – being an old building – it was probably connected to next door`s supply! So, with the aid of a long extension cable, we powered up the servers and key colleagues were able to use remote access connections (the one thing we had planned for) to return us to some semblance of normality – at least to the outside world!
Now, how likely it is that we could have anticipated the catalogue of other people`s errors that led to this incident is a moot point. But it is illustrative of just the kind of risks that lurk around every corner. But, the fact that we avoided a disaster was down to luck, rather than planning.
You could categorise our mini disaster under the heading of a technical failure, or even a service provider failure, but risks come in all shapes and sizes and can include loss of key personnel; reputational risk; regulatory and legal failures; financial losses; poor project management; compromised governance; or environmental factors like flood, gale, snow, or fire.
Risks tend to cascade, trigger a domino effect, or worse still collide to exponentially magnify the consequences. So, formulating a risk register that identifies threats, and puts in place plans to deal with the fall out, has got to be a good idea. Yes?
Of course, risks sometimes revolve around people too. I know of one trade association that suffered severe trauma due to the loss of its CEO and Chairman. Reputational risks ensued from allegations of inappropriate behaviour, leaving a compromised and rudderless Board in charge. Finding scapegoats, apportioning blame, and alienating those who could have mitigated adverse publicity did nothing to help. And, despite loyal staff eventually regaining equilibrium, the long-term damage is impossible to calculate. But much of it could have been avoided had there been a plan in place for the Directors to follow!
Dull as it may seem, a risk register lists all the risks pertaining to a business (or project), their grading in terms of likelihood of occurring and seriousness of impact on the company, initial plans for mitigating each high level risk, and subsequent results. It also usually includes details of who is responsible for managing the risk, and an outline of proposed mitigation actions (preventative and contingency). It must be regularly re-assessed as existing risks are re-graded in the light of the effectiveness of the mitigation strategy, and new risks are identified. So, ‘filing and forgetting’ it isn’t an option!
Michael Hoare FIAM
So, a risk register tells us the what, where, and how of risk management, but it also provides the trustees, management committee, and funders with a documented framework against which risk status can be reported. It also ensures the communication of risk management issues to key stakeholders and compels them to act. Let’s face it, disasters happen! Some are predictable, others preventable! But if they strike while you’re in charge, neither shoving your head in the sand, or running around like a headless chicken are attractive options!!