What a 1950s farmer knew about risk that we can all still learn from. Keyline design meets the environment as it is, and we adapt. Risk management needs to do the same.
Keyline 101
Keyline design was developed by a chap named Yeomans in Australia. He recognised that water is the key input in any agricultural system (and a scarce and precious one; never more so than now). The design led to what is now termed “a regenerative land and water management system.” To you and me, that means trying to drought-proof landscapes by deliberately slowing, spreading, and sinking rainwater (good soil stores more sunk rainwater = good for the climate, plants, and water retention).
Parallels for business: Most strategies (and investment due diligence) start with a thesis (how we plan to shape the world). I’d argue that it should start with context (the operating environment). To explain why, imagine you planned out a farm, idealised, like one of those games my mother-in-law plays on her phone, where she shuffles around wheat, chickens, strawberries, etc. on an entirely contour-less iPad screen. Now, try to impose that ‘plan’ onto actual terrain (the nearest green space to you).
Impermanent Permanence
Keyline concept: Yeomans ranked landscape features by how long they’d take to change: climate takes longest, then land shape, water, trees, roads, structures, fencing, and soil last. You don’t plan fencing before you’ve understood your climate.
We run a small homestead, and in year one, I learned this lesson the hard way. The land shape and water flow threatened the house. Trees and structures (channels and ponds) needed to come before we could think about what to grow (fencing and soil) and where.
Risk parallel: Many governance frameworks reverse this and wonder why there’s often an almost tissue-rejection from the business. They design policies (fencing) before mapping the operating environment (climate), the sector dynamics (land shape), or the financial flows that actually drive behaviour (water). In this example, your risk management becomes a Sisyphean task of reposting fencing in a flood plain.
Finding the Key Point
Keyline concept: The Key Point is the inflexion where gravity (e.g., a slope) meets stability (e.g., a gentle valley floor). It’s where a small intervention (a pond) has the greatest leverage by distributing water further and more efficiently than anywhere else on the property.
Risk parallel: Every business has a Key Point. We’ve known this for years. In fraud risk management, there’s even a model - the fraud triangle, which considers how wrongdoing (usually) occurs where opportunity meets pressure, and is followed by rationalisation. I somewhat disagree. I’ve seen humans overcome every control put in front of them when pressure necessitates. Pressure is the Key Point.
In this setting, pressure might be from within the organisation (targets, KPIs, fear of losing a job, etc.) or personal (debts, family pressures, living beyond your means, etc.). Whatever the case, it’s hard for any risk or compliance function to identify “high risk” activities, roles, or functions without an intricate understanding of opportunity (where controls could be subverted for unethical gain) and pressure.
Slowing, Spreading, and Sinking
Keyline concept: We can’t fight gravity. I tried repeatedly as a kid (cracked ribs and fingers testify to the stupidity). Keyline is smarter than 8-year-old me, and works with physics, instead focusing on slowing runoff, spreading water across the landscape before it pools or disappears. This might include off-contour cultivation lines that drift water gently from wet valleys to drier ridges. Here, we also see interesting regenerative practices evolving, like the reintroduction of beavers near us.
At this point, for the first time, we (humans) are trying to interfere with nature.
Risk parallel: Financial flows — including revenue, commissions, expenses, procurement, capex, fees, etc. — tend to run downhill toward the path of least resistance. Not convinced? Watch how people’s spending habits change when you move from company cards to reimbursements for personally incurred expenses.
Our role here is much like that of the ponds and irrigation: to slow (overly) fast financial flows, spread oversight and control, and make sure money doesn’t concentrate unseen. Controls placed too far downstream (audit, annual review), in this example, often become the dam at the bottom of a valley (a stopgap, but the damage is already done).
The Culture Is the Soil
Keyline concept: Soil is the last item in the Scale of Permanence. For many of us (including in our yard), it is the most workable variable and most responsive to intervention. But it takes forever to build, and it is the fastest to lose if you get everything above it wrong.
Risk parallel: Culture is the same. It’s what everyone talks about first when something goes wrong (“culture change”). However, it’s impossible to change culture without a patient and rounded understanding of the environment, the incentive flows, and leadership (intervention). Plant directly in bad soil without preparation and reliable water, and crops fail and livestock die. So, the next time you hear, “We should run some ethics training,” after some egregious screw-up, be afraid! A waste of money and, worse, it may further degrade the soil.
Over to You
Many business leaders and investors read the business plan before understanding the lay of the land. We must, therefore, ask whether your risk framework was designed for the terrain you’re actually operating in, or the one a strategy consultant sketched out on an iPad.
How do you map and understand your terrain?