Last week, Dupont Sustainable Solutions shared some interesting insights from its survey of executives across 350 companies. Dupont’s Davide Vassallo (and fellow Safety Nerd) expressed a strong message that executives should form fresh perspectives on risk and create business strategies recognizing the importance of risk to productivity and performance.
To sum it up in one sentence, “If left unchanged, a company’s operational performance, business continuity, right to operate and ability to deliver consistent value to shareholders could all suffer.” I couldn’t agree more with the conclusion, particularly given that two-thirds of the respondents of the survey had global operations in high-risk industries. But what would this mean for a typical medium size organization of 200 to 1,000 employees?
The implications are nuanced for the medium size organizations that operate in highly competitive niches and regions. These companies are more likely to be private and family-owned companies, which may also affect attitudes towards risk over longer time horizons vs. executives within larger public companies.
DSS’ survey expressed concern in three areas which I’ll explore more from the context of the medium size organizations, which represent the majority of the 400+ companies we help protect here at eCompliance.
Executives are not placing sufficient emphasis on risks that can lead to large-scale incidents
It’s natural for executives to start measuring the level of risk by asking “How many things went wrong?” Executives like to manage and set goals based on hard data but after a decade or two of traditional incident and injury reporting in most organizations, these measurements on their own may not be a true reflection of operational risk levels.
Fortunately, a focus on Leading Indicators is driving more creative approaches to measuring and reducing risks. Leading indicators can be measurements of things going right and people doing a good job. Here’s another perspective for executives: when was the last time your organization measured what went right and communicated it instead of just what goes wrong?
Executives address gaps in risk management processes by adding more processes
As an executive myself, my good colleagues can attest, I have a tendency to push for processes where I see gaps (another good article arguing against this here). For most medium size organizations, however, I see a different opportunity: to simply make transparent how many controls established for key risks are actually operationalized.
Most companies in high-risk industries have their front-line workforce perform facility inspections, safety meetings, audits, and the list goes on – but most of these companies do not track the activity levels, results or insights from these daily/weekly controls. This is a huge opportunity to see what risk looks like, especially when it can be shared real-time through dashboards for data-hungry executives ready for action. The question for executives is: before you add more process, are you getting visibility into your controls already in place?
Surveyed executives feel front-line personnel is not aligned on top risks facing the company
Despite best efforts of dedicated front-line personnel and risk-focused executives, the distance between what happens on the front-lines and executive decisions couldn’t feel farther. As one front-line supervisor in construction recently told me, “I reported risks for 15 minutes every day for 25 years, but the paper went in the black box at HQ… I felt like my time was wasted and under-appreciated.” For companies investing in closing this gap with mobile technology and other tools, this story is changing. As that same supervisor continued, “…but now I really work that 15 minutes because I often get feedback on my risk assessments and what I do helps other supervisors, especially the young ones in other regions of our company.”
The company, in fact, had shifted to a two-way engagement model, reviewing risk themes by region, by supervisor, and by product line on a weekly basis generating several critical interventions. Question for executives: if a major operational risk was trending across your front-line supervisors in the last two weeks, would you know about it?
Although the Dupont article may sound some alarm bells for executives in high-risk industries, agile organizations of all sizes are well positioned to turn risk into opportunity. Our “big data” research across millions of human behaviors backs up this claim. Companies using two-way engagement for assessing and acting on risk with the front-lines are well positioned to not only reduce the chances of those disaster scenarios but also build competitive advantage. Making use of data on existing controls and reporting on what goes right are other common tactics exhibited by top performing organizations. It’s time to look at risk differently, not as something to be feared but as something that is controllable. Then, our entire workforce can act to drive the top goals and missions of our organizations.