Recalibrate your approach to strategic risks to achieve your goals

There’s a default assumption in much of the public sector that risks should be prevented or eliminated wherever possible.

It’s a compliance mindset - one that sees risk management as rules and processes and monitoring and enforcement.

The management of this type of risk is hard wired into how these organisations work and usually imposes a heavy administrative burden - sometimes costing more than the risks themselves would, had they materialised.

And as much as a compliance mindset for risk management needed and prudent and responsible - it does crowd out thinking about other types of risk.

Most notably, for me, strategic risk.

Because risk isn’t inherently a bad thing.

The easiest way to avoid benefit fraud is to not issue benefits at all. The risk is taken - intentionally - because it is deemed justified in order to achieve strategic objectives around poverty reduction.

Strategic risks taken are strategic opportunities seized. They are the gambles you decide to take because they align with a particular pay-off you’re chasing. The challenge here isn’t risk avoidance or elimination - it’s deciding where to place your spread of bets in pursuit of your strategic goals. It’s only after that you turn your attention to reducing the likelihood and impact of downside risk materialising.

Folks that don’t differentiate between these types of risk find themselves in situations where their risk management is preventing them delivering anything at all. It stops them reaching new markets and communities. It stops them experimenting with new technologies, stops them innovating, stops them learning.

If this is you, or your organisation, do yourself a favour:

Figure out what upside risk you need to pursue, what opportunities you want to seize, in order deliver on your vision and strategy.

And then manage your risks with that in mind - questioning your existing defaults - because they’re almost certainly miscalibrated right now.