Risk-based thinking makes preventive action part of the organization’s routine for those organizations who have robust risk management systems in-place and when the organization’s people are well-versed with the risk management activities. And while very few organizations were ready to cope, at least immediately, with the COVID-19 pandemic impact on the workforce safety, operations continuity, and financial repercussions. From our experience in the past year and working closing with dozens of suppliers and clients, the organizations and teams who exhibited a risk-based thinking, had better chances and mechanisms to respond to the pandemic.
At its core, risk-based thinking is about understanding the consequences of action/or inaction and taking appropriate steps to avoid the inevitability of those consequences when they are considered significant. In other terms and in the case of our organization, it was about mitigating the potential side effects of the undesired outcome related to food safety, health & safety, quality, and operations as impacted by the pandemic.
Working in the food sector, we were confronted with several challenges when the pandemic started. Maintaining the continuity of our operations while preserving both our employees and food safety sounded as an impossible task at that time. As a first response action, we gathered a multidisciplinary team from Quality, Food Safety, Health & Safety, Human Resources and Operations to tackle risks in this crucial period. The formation of the team had demonstrated its effectiveness in overcoming the structural barriers that otherwise would have deterred the connectivity and collaboration across the organization. Another benefit of the team was the centralization of databases and information needed to support the decision-making process at both executive and operational levels.
Having to deal with a public health issue and still maintain normal operations, several risks were also considered, these included health and safety risks from suppliers and clients interacting on daily basis with our staff, disruption in our supply chain as the country we operate in relies mainly on import of food raw material, access to required personal protective equipment (PPE) and many others. The specific COVID-19 risk assessment and mitigation/prevention measures taken enabled an uninterrupted operation regardless of COVID-19 positive cases; site-wise activities specific measures, enforcement of COVID-19 prevention measures with suppliers’ collaboration, adjustment of stock levels, and building a stock of PPE for further emergency.
As we now operate in one of the “Interim New Normal”, there are many lessons learnt from the past 6 months, that organizations could apply to bolster their risk management approach moving forward. Not only to prepare for future crisis and continued volatility, but to identify and grasp business opportunities as they emerge and make a better business sense of risk.
Let us have a close look at the 3 elements that made a difference for our organization in its dealing and response to the pandemic.
Enabling Corporate Culture
A corporate culture based on openness, transparency, trust and collaboration enables the risk related function(s) to build strong relationships with the other functions in the organization. An unparalleled benefit is observed from the collective knowledge of all functions while practicing informal and formal risk assessment and the cross-functional information exchange. What matters is the “talk” and not the report. Furthermore, a company who puts a lot of effort during normal times to communicate openly, share the “why” behind decisions and improvements, involve and value employees’ contribution to strategic objectives at all levels, will enhance trust in the leadership and collaboration among its workforce and reap its results in challenging times.
Ability to have open discussion and assessment of all types of risks helps the organization preparedness to act, adjust its objectives (strategic and tactical) and adapt to change in a collective and aligned manner.
Adaptability among employees and teams and empowerment to experiment are other traits of corporate culture that are critical in a disruptive environment. An organization who nurtures a culture of continuous learning, experimentation and innovation is more adaptable to change and disruption.
Risk Management is more than a policy, it is a cultural shift
The goal of a robust “risk-aware culture at all levels” is not to avoid risk but to focus on creating a shift in the organizational culture, where risks are managed proactively and not reactively. A proper and integrated risk management approach facilitates a good risk identification and control, and creation of new opportunities for improvement for the organization. This is applicable to all areas.
During COVID-19, risks related to psychological and physical safety of employees took a more predominant position in risk management and lead to more human centric decisions. Staff morale, empathy and proactive support to their personal and family needs in addition to work related needs kept the level of performance during the pandemic and remote work identical to what it was before that period in most cases.
Risk-Based Thinking as a Mindset
In the time of pandemic, practicing informal risk assessments, more frequently and promptly, as needed in such situation, leads to enhanced proactiveness and responsiveness of an organization, cutting the time on formal risk assessment. Put in other words, having a pool of talented people with a risk-based thinking mindset in an organization, is reflected in a better-decision making process both at a business and management systems levels.
Evidence of this mindset could be observed in the effectiveness of risk control measures to stop the spread of COVID-19 within the workforce at different levels. Staff who had a risk-based thinking mindset were able to identify risks in their actions, better comply with the preventive measures and protect others as needed.
Robust Risk Management Process
Creating a robust risk management process depends on an integrated approach built across different functions and considering the context of the organization, its ecosystem and all its stakeholders. While establishing the management systems in an organization (QHSE, RMP and BCP among others), starting with a holistic identification of stakeholders, their needs and the risks and opportunities of the organization in its context, is critical to identify those elements that could impact the organizations business, its systems, delivery of products and services, and ultimately its customers’ satisfaction. Robustness of the risk management process depends on these initial exercises, the use of correct historical data, current performance, and future risk foresight.
A risk-aware culture would ensure that the entire workforce is aware and knowledgeable of the risk identified, their impact and control measures in-place. A proper two ways mechanism to communicate and take input from staff on the risk assessment should be established.
Before the pandemic, Abela & Co scored 83% on food safety risk foresight awareness during a Culture Excellence Assessment. Such score represented a high level of staff awareness on risks of cross-contamination. During the pandemic, it is this level of awareness that helped the company stay on track, ensure its operational continuity, compliance with local rules and regulations related to COVID-19. But most importantly, it kept both employees and food safe.
It is possible to prepare for unknown risks
Reflecting on the organizations’ response to the pandemic, one could observe some distinctive capabilities that distinguish highly adaptive companies in facing black-swan events and disruptive environments. They include organizational, cultural and systemic advantages. Risk-aware culture and risk-based thinking across different functions ensure better and prompter response to external and internal changes.
When an integrated management system is implemented, including risk management, it will lead to a better alignment and coordinated effort within the organization. Hence, a greater, more efficient, and effective effort in identifying risks and opportunities and coping with disruption and changes. And with the least impact on performance during disruptive and challenging time.