Plan in earnest, and with pessimismFeb 23, 2022
At the beginning of the year, I wrote about the six skills that leaders would need for the future. One of these is risk management. Looking at today’s headlines I wonder how many risk registers, risk conversations, or risk planning contained the words “War in Europe”. Most organisations would say they manage risk well, but mostly they manage the obvious risks well. The big existential risks tend not to be thought about because it is too hard.
But war is a big risk, an expensive existential risk. Even the political leaders are struggling to come to terms with the fact that their future economic planning may be suddenly overturned. Even if all out war is averted, the future, particularly for energy supply, looks hazardous.
For business leaders this is the moment to start to scenario plan in earnest and in pessimism. Energy markets are already reacting, what does a huge hike in oil prices do for your cost base? What could be the effect of a European conflict on your supply chain. If your business buys, sells or manufactures in Russia or Ukraine then what action should you be taking now. Where are your people? Do you need to plan to move them? In your teams are there people with families in dangerous places, how might you support them?
We have seen in the past that when plans start to unravel, they can unravel very fast. If you are running a business, you must think about these risks and take whatever action is necessary. Do not wait, do not assume it will all end well. Do not assume that anyone will act rationally and sensibly. Managing the survival of your business is your responsibility. If you haven’t already started planning, then start now. If all does turn out well then you are some way to preparing for the next time. If it all goes badly then your business may be in a better state to survive.