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Risk Management for Teams

Knight Campbell
November 20, 2023

Risk management for teams is one of my favorite topics, because it’s associated with reward. Having guided in the mountains, flown helicopters for the Navy, and now run a small business for six years, I have seen plenty of risk. Some works out, some doesn’t. We do have a lot of control over the outcomes though.

In fact, at Cairn Leadership Strategies we purposefully take on risk with the teams we guide. That’s what makes the team development work so well. As a bonus, teams learn some hard skills around assessing, discussing, and managing risk that they can take back to the business world. Read on for some thoughts on managing risk more effectively on your team.

tool to enhance risk management for teams

What does risk actually mean?

We all perceive risk in different ways, but at baseline it’s just a bad outcome expressed in terms of the likelihood and severity of the consequence. Risk is a bet. If we knew an action would lead to a bad outcome we would not take it. If we knew it would turn out well, we would not be risking anything.

To be safe, appoint a devil's advocate.

People don’t like to be negative. We don’t want to poke holes in our work products and strategic plans. We don’t want to be the one to say that a pristine powder loaded slope might not be safe to ski. It’s helpful to assign a random person in the group to play the devil’s advocate. This can become a funny exercise where the person makes ridiculous arguments against the consensus, but sometimes they might just have an important point that saves you millions of dollars.

Another pro tip is to conduct pre-mortems regularly. Simply ask, what is the worst possible outcome of this decision? You’ll be surprised by some unseen risks your team identifies when you frame to conversation that way. You’ll also feel safer having identified and mitigated some of those potential outcomes in advance.

Risk management for teams is the leader's work.

In one of my favorite Harvard Business Review Articles, the authors report that Barry Zubrow, chief risk officer at JP Morgan Chase, said, “I may have the title, but [CEO] Jamie Dimon is the chief risk officer of the company.” Visionary leaders need to think of the risk as much as the potential upsides. Any leader not considering risk is likely to become dangerous to the organization at some point.

Generate more awareness about risks.

When we manage risk, we need to start with awareness. When we lack awareness of what could go wrong, we have a hard time intentionally mitigating risks. Typically we have low awareness of all the things that could go wrong. We get lucky and assume we are smart.

Get intentional about risk management on your team.

We have a few options when it comes to managing risk.

Avoid. If the bang isn’t worth the buck or we can’t make the bad thing’s likelihood or consequence go down, it’s a good day to stay out of the mountains.

Transfer. When someone else is better equipped to manage the risk, transfer it to them. This could be transportation companies for clients, hedging bets with a financial firm, or hiring a guide in the mountains.

Accept. If the reward is high and likelihood and consequence are low, you might not want to waste time mitigating risk. This looks like driving to work or investing in a money back guarantee opportunity.

Mitigate. If the reward is enticing, but your gut and your team says it’s not quite worth it, you can find ways to make the downside less likely or less consequential. In the mountains this means wearing a helmet and choosing the right route through risky terrain. In business, it might look like reserving funds for innovative projects, getting paid up front, or opting for contracts that are easy to get out of if a partner does not work out.

Bottom line, it takes a lot of time and effort to effectively manage risk on your team. We help our clients develop the systems to identify and manage risk proactively at the lowest level. See what an adventure for your team could do below.  

Questions? We'd love to hear from you! 

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