In business, the “it won’t happen to me” mindset isn’t just blind optimism — it’s an inherently flawed and frankly irresponsible approach to risk management.
The reality is risk is everywhere – the question isn’t if a risk event will happen, but when – and how much of an impact it will have on the bottom line. One small point of vulnerability in your business — or that of a partner’s — could lead to a risk event that snowballs into a situation that hurts stock price, brand reputation, financials and more.
The priority should be in ensuring that risk events don’t turn into worst-case situations. The key to stopping events from reaching nightmare status and limiting the impact of events is planning. A comprehensive and strategic, proactive risk management plan considers all vulnerabilities across the enterprise and provides the answers on how to stop them before they grow beyond your control.
If it can happen to them, it can happen to anyone.
One recent example of a worst-case scenario is the recent Notre Dame disaster, where warnings of a malfunctioning fire prevention system and concerns over inadequate staffing fell flat. There was only one security guard – who had only been employed by the cathedral for a few days – working the day of the fire due to staff cuts, which led to a delayed call to firefighters. Aside from the sentimental impact of losing such an iconic cathedral with 850 years of history, the rebuild will cost upwards of $2 billion and take over two decades to complete.
Could Notre Dame’s nightmare have been avoided? The short answer is yes – with the right approach to risk, plans and controls, companies can mitigate and limit the impact of even the worst possible scenarios.
Seeing what’s around the corner – before it gets to you.
The first step in effective risk management is proactively looking at all risky situations that could affect the organization’s performance – including intangibles like reputation. This means having visibility into the risks unique to each department and analyzing them collectively to see how they relate to each other. Pulling risk information from across the business into one, cohesive source gives a clear picture of the cumulative impact of risk on the organization and makes it much easier to identify appropriate mitigation plans for worst cases. Just like a doctor wouldn’t look at a symptom in isolation when evaluating a patient’s condition, risk managers need to look at all potential factors before determining an organization’s ability to handle a risk event.
The risk landscape can change quickly, which means it’s critical to be able to assess what’s happening in real time and act at a moment’s notice. Having complete, accurate and up-to-date risk information, which is enabled by integrated risk management technology, means teams can continuously re-calculate the potential impact and ramifications of a risk event as it evolves, which enables risk managers to immediately focus on the issues most likely to turn into the worst-case scenarios.
Ask “what if” before it happens.
Notre Dame experienced its worst-case scenario – but the truth is these events could happen to any organization, which is why it’s important to think about such possible cases, well before they become reality, and have a plan in place for mitigation.
When it comes to risk, the mindset should not be “it won’t happen to me,” but rather, “I won’t let it happen to me.” With the right tools, processes, resources and partners, control over risk – even the big threats – is possible. Good risk management doesn’t just happen — it takes proactivity, collaboration among key stakeholders, and setting the right intentions.
Learn more about Integrated Risk Management and how having the right toolbox can help you mitigate the long-term impact of risk events big and small.
