Operating Risk Lessons From Bad Weather...
I’ve been watching a report on the impact of winter weather on businesses in the North of the UK. These businesses have seen reduced sales and, in some cases have had to lay off staff or even close down.
I’ve had two clients suffer from bad weather. One thought about the risks in time.
Basel II defined a great framework against which to assess
Operating Risk. There are 7 elements:
1.
Internal Fraud
2.
External Fraud
3.
Employment Practices and Workplace Safety
4.
Clients, Products and Business Practices
5.
Execution, Delivery and Process Management
6.
Business Disruption and System Failure
7.
Damage to Physical Assets
What were the risks here in the case of bad weather? It depends on whether you were a business
owner, a supplier to that business or a customer. In terms of the business owners, I saw the
risks as:
·
Employment Practices and Workplace Safety
·
Clients, Products and Business Practices
·
Execution, Delivery and Process Management )
·
Business Disruption and System Failure
Business owners and/or staff would not have been
able to get safely to their businesses to work (workplace safety and execution), customers (clients) would
have been prevented from coming for the same reasons resulting in lost sales
and business was obviously disrupted as a result. Even if staff and customers had been able to
get together, a supplier might not have been able to do so.
In the case of their suppliers, the risks were:
·
Employment Practices and Workplace Safety
·
Execution, Delivery and Process Management
·
Business Disruption and System Failure
Suppliers wouldn’t have been able to deliver goods for the
same reasons that business owners and staff couldn’t get to work safely and
would in turn have experienced disruption from being unable to deliver goods
and receive payment.
For customers of the businesses, the risk was mainly safety in
getting to the business and disruption to routine from the weather. They might also not have been able to go to
banks to withdraw cash.
At this point, people would now say “You can’t do anything
about the weather” or “It’s always the same in winter in that area”. True, but you might consider some of the steps below.
First, the art of forecasting is improving; information is
better. With this in mind, plan what
might happen and your response. If heavy
snow is predicted, supermarkets, for example, might expect to see a surge of
customers before it hits, so could stock up.
Second, if a business depends on “footfall” (i.e. customers
coming through the door), the owner can make sure that there’s access. This may depend on the local council’s
ability to keep roads clear, but pressure from Chambers of Commerce, Business
Federations and the general public can be brought to bear. What could you do to encourage footfall?
If footfall isn’t an issue, what can be done instead?
Third, is a business equipped to go to the customer if the
customer can’t come to them? Some can do
this, others can’t (a jeweller or tourist souvenir seller can hardly go from door to door in the hope of
finding a buyer, but a grocer probably could).
Knowing your customers and their needs is critical here.
How easy will it be for staff to get to work (and how
motivated are they) if conditions are difficult? Have a plan in place for communication and
(if necessary) safe transport.
Talk to suppliers. If
your business relies on key goods or supplies, arrange to get them in ahead of
time (this assumes you can still sell them after).
Risk management is about looking forward. What’s the worst
thing that could happen, and what’s the worst time that it could happen? How likely
is it to happen and what would be the consequences for the business if it did?
I have spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy to offer solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.
Labels: Crisis Management, Customer Care, Productivity, Risk, Strategy
posted by William Martin @ 15:12
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