This time last year, I finished writing “20 Risk & Sustainability Tactics That Halve Risks, Improve Impact, & Deliver Value.” What on earth prompted me to write yet another detail-packed paper? I have no idea.
Actually, that’s a lie. In numerous projects, I saw risk overlap cause a mess (at best) and sometimes chaos (at worst). If we look from the other lens, most investigations seldom stop at one risk issue. For instance, that fraud scheme involving employees and contractors might also have transgressed data protection, cyber controls, physical security, employment practices (hiring to non-retaliation), fiduciary financial duties, etc. These issues are (frequently) managed separately (HR, Finance, Legal, etc.).
In the context of sustainability, the potential ‘blowback’ of failure extends further. No part of a business (from sales to production to support functions) doesn’t have exposure and the ability to cause sustainability risks. In this setting, I wrote about the unintended consequences of (in)action (also called “second-order effects”). These consequences may stem from internal decisions or external events. One example of the latter mentioned in the paper was “trade disputes,” which are now more timely than they were for a while.
This morning, an investment professional at an emerging markets-focused fund queried why a crisis management framework (plan) might be a helpful thing to ask for when investing in mid-cap businesses. I get the contention; it’s not a standard document to request as part of a pre-investment risk assessment (due diligence). Additionally, many mid-caps won’t have such a framework formalised (which is fine; I’m always more interested in how situations would really be managed than what’s written in a file lost in a drive somewhere). I explained that it’s very hard to consider the impact of risk (let alone second-order effects) if we haven’t discussed how to manage things going wrong.
As we enter a fractious geopolitical and economic period, now would be a good time to step back and consider intersectional risks (the PESTLE topics, for starters ). Do you think you might be able to squeeze a 45-minute crisis simulation into the organisational agenda to help understand:
💡 Which risks are (likely) connected 💡 The impact of decision-making on, err, impacts 💡 Knowledge gaps (known unknowns) 💡 What’s within your control (as external storms gather) 💡 Risk management efficiencies (overlap, duplication, contradiction)
Death to [three letter acronym]; Long live [euphemism]
Many column inches have been dedicated to the demise of ESG (and DEI, EDI, inclusion, etc.). How much is hype, and how much is real? You will know from within your organisations. But this could be a good thing.
If organisations now have to look at what matters to their stakeholders (customers, employees, and shareholders), could we be more purposeful? Working with mid-caps especially, I saw how ESG can become a box-ticking exercise driven by compliance. There was little rightsized about it.
So, what should we do as we contemplate a world where some three acronyms have become polarising? Peter Hyman, a former advisor to Tony Blair and Keir Starmer (forgive him, briefly), wrote in The New European that “sensible people must first acknowledge our seven deadly sins”, which he defines as:
😬 “We’re patronising (thinking we’re cleverer than the rest); 😬 Complacent (our logic will surely win); 😬 Abstract (full of airy-fairy reasoning); 😬 Censorious (quick to cancel others); 😬 Gullible (in a fit about every turd Trump or one of his wannabes drops on the pavement); 😬 Conservative (with a caution born of fear); and 😬 Bland (our emotions start at earnest and end at sincere).”
Hyman was talking about politicians and the electorate, who he believes have experienced “a loss of control economically, culturally and socially”. However, the briefest trawl of social media would suggest that the same dynamic could occur in the workplace. Some rules and the ‘tone from the top’ can seem all of the above (patronising to bland, maybe skipping gullible). That’s the bad news. The good news is that we now have a chance to ask people for their views and suggestions to build back better.
It’s not easy, but it’s doable. Our ethical culture work has been among the most rewarding - identifying what matters and who needs what support, on their terms. I’m happy to share more if you’re interested.