According to Murphy’s Law, if something can go wrong, it will. The saying was birthed at Edwards Air Force Base in 1949 by Captain Edward Murphy, an engineer working to see how much deceleration a person can handle during a crash. One day, after finding a transducer that was wired incorrectly, he grew angry at the technician responsible and said, “If there is any way to do it wrong, he’ll find it.”
When the project was finished, the project manager held a press conference and said that their good safety record on the project was due to a firm belief in Murphy’s Law and in the necessity to try and circumvent it. In other words, they planned around every risk possible.
These days, it’s not as easy as it once was to have a 360-degree view of risk throughout the entire enterprise due to globalization, the rise of social media, frequent M&As and so much more. Stop & Shop and Samsung are two companies that recently experienced the consequences of not having a clear view of all possible scenarios, and to back up Murphy’s hypothesis, what could go wrong certainly did. These situations are only the latest reminders that having a plan for every type of risk is crucial.
Risk comes at you fast
When things started to go wrong for Stop & Shop and Samsung, it seemed to have a domino effect – as most things do. For Stop & Shop, its business decision to change the structure of its healthcare benefits and pensions in order to compete with nonunionized grocery resulted in 31,000 employees walking out of their stores in three states for what would be an 11-day strike – which is projected to have resulted in up to $110 million in losses
For Samsung, its attempt to create hype around its new foldable phone by letting early reviewers and analysts take a first look ended in turmoil: the phone malfunctioned for some very high-profile testers, eventually leading to the delay of its launch.
What’s the moral of these two stories? In a world where Murphy’s Law rings true, no matter how vigilant you are, risk comes at you fast and from all sides. Which is why how organizations handle risk is just as important as preventing it in the first place.
You can’t prevent what you don’t know is there
Integrated risk management (IRM) approaches bring enterprise-wide visibility that enable risk managers to clearly see where potential strategic and operational risks lie, which are most likely to occur, and what the collective impact could be on the organization if something does, in fact, go wrong.
This is important because every single risk facing an organization needs a governance plan, and IRM makes it a lot easier to understand what you’re up against, identify the best path for addressing each threat and ensure every stakeholder is aligned in how to respond. IRM, with its risk registers, mitigation processes and governance procedures, gives companies a well-rounded and ready-made toolkit for putting controls in place that prevent a risk from happening in the first place, and limit the widespread impact of events that inevitably pop up.
Success isn’t always determined by how we prevent risk, but how we handle it. Reality is it’s not a matter of if risk will happen, but when it will happen — and it’s a company’s ability to respond in an efficient and timely manner that makes all the difference.
Find out how Integrated Risk Management can help your team be resilient in the face of every risk.