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ISO Certification for Executives – Managing Risks Part 1
Episode 14 ISO Certification for Executives – Managing Risks Part 1
ISO Certification – Managing Risks Part 1
In this episode of “The Quality Hub” podcast, host Xavier Francis interviews Scott Dawson, president of Core Business Solutions, about managing risks in business. Scott shares his journey in the quality management profession and emphasizes the importance of being proactive in identifying and managing risks.
Core Business Solutions publishes ISO Certification podcast episodes weekly. You can find more episodes here.
Episode 14 Key Content
Hello everyone, and welcome to the Quality Hub, chatting with ISO experts. I’m your host, Xavier Francis, and I’m here with Scott Dawson, president of Core Business Solutions. So glad you could be here with us again Scott.
Well, it’s my pleasure. X for sure.
So glad you’re here. Today’s show is entitled Risky Business and we’ll be looking at risks your business may face. But first off, let’s learn just a little bit more about Scott. Can you share a little bit about your journey?
Yeah, sure. Glad to. So I’ve been in and around the quality management profession for most of my adult life and found myself in charge of Core Business Solutions one day. There’s a whole story in the other episode you can go back and listen to it, but have learned a lot about what it takes to grow our business and succeed as a business.
And, you know, I am, you know, head of this company. But every day I feel like I’m doing something new and learning something new. And so glad to share some of my journey here.
Well, thank you. We’re so glad you’re here. In my time here. I’ve noticed you have a special place in your heart for risk.
Right.
So that’s why I was like, I think this would be a great one for Scott to be.
Well, the Gameboard too.
Yes. Yes. The game board. Yes, absolutely. So before we delve deeper into the risks businesses face, I believe it might be a little bit useful for us to first understand some basics. Hey, Scott, could you explain to us what risk means from a business context?
Absolutely. So in a business context, risk is essentially anything that could potentially impact an organization’s ability to achieve its objectives. And so it could be something that an event occurs or an action happens or the opposite, a lack of action that leads to an undesirable outcome. So risks can be internal, they could be external impacts, various aspects of the business.
Managing risk is really about getting ahead of problems and trying to anticipate what those problems are from an operations or financial performance could also include the company’s reputation or customer satisfaction. And risk is just a way to stay ahead of it.
Okay. A lot of people might look at it as reactionary. This is thinking more about it being proactive and thinking about it before it may occur.
Yeah, exactly right. Yep.
So as you said, every business has risks and we need to manage them. What might that entail?
Well, so when you use the term risk management, you’re often thinking about it from a process point of view. Just thinking logically through it before you can manage something, you don’t have to identify it, so you’d have to know what it is that could occur, what might happen, and How serious is this.
So that’s kind of the assessing phase. And then how would we control that problem or potential problem before it occurs? So it’s identifying potential risks, analyzing them, understanding the impact, and the likelihood that it could occur, and then implementing strategies to mitigate those risks. So now we’re starting to use some of the mumbo jumbos around risk management.
Okay. We’re getting it to mitigate.
In mitigating likelihoods and impacts and things. But all of those are just ways to kind of think through these problems before they occur. And you can’t necessarily eliminate all risks. I think that’s an unrealistic thing to strive for but to understand the things that you’re aware of that you could anticipate, manage those effectively so that you minimize the impact, you minimize the road bumps along the way as best you can.
That makes sense. That makes sense. And probably also some risks. Like you said, you can’t make them go away. And there may be some that perhaps you choose not to approach yet because it might be less likely.
Yeah, well, less likely. Or maybe it’s just a minor thing that you say, Well, we’ll deal with it if it comes up, you know, type of thing.
But others are, you know, that could be catastrophic. And we need to, you know, go all out to prevent it. So there’s there’s just different, I guess, levels of risk that you need to think about.
Yeah, just like ISO 9001 in general. It’s what’s good for your business. We talked about it a little bit. Why is it so important for businesses to manage this risk?
Well, risk management is important because it helps sustain the business. It helps the business to have a smoother path toward success. By identifying and managing risks, you’re being prepared for challenges that have the potential that come up. You can respond when they do occur and it can, I guess, change the mindset in terms of decision-making within an organization, try to make the organization more efficient, and make it stronger from a competitive position.
There are a lot of benefits to managing risk effectively, but it doesn’t come without some effort.
Right. And do you feel that in your experience, once you’re starting to look at them, they become less scary?
I think it depends. Sometimes out of sight is out of mind. Or you, I call it whistling past the graveyard. You know, like, if I just don’t look over there, nothing’s going to happen. So I think it depends on, you know, how severe an issue is. Some things are not worth the effort to look at because they’re completely out of your control. Even though they might be serious here, you can’t control the events.
Right. Like if there’s a tornado that takes your whole building down, there’s you can’t control.
How could you prevent a pandemic? So here’s an example that we all just had to deal with. I mean, theoretically, we knew sickness could break out. I mean, we’ve had flu around an office or a cold go around a family. But a pandemic? Who would have thought?
And we’re still dealing with supply chain issues and so much of that. Well, you mentioned that there are a ton of different risks, both internal and external. What are some of the internal risks? The business may face?
Yeah. Internal are things that are more within your control or as a result of your actions. Unintended as it might be. So, for example, you might have technology risk.
Well, I think every business has some level of technology risk because technology goes out of date. Technology breaks down. Technology gets hacked. So technology is an aspect of a business that you’d want to consider in terms of trying to anticipate what could go wrong and dealing with a technological problem. Because that could shut your business down.
Yeah, if you’re manufacturing, absolutely could. Well, not just manufacturing, but if you’re based on computers and your service organization and you have no clue who the next person is going to be or when something is done or what we’re going to do, it doesn’t matter.
Well, thinking about the studio we’re sitting in right now. All the technology around, you know, we wouldn’t be here doing this today if we didn’t have problems.
Like 20,000 points of failure, which I somehow try to mitigate as many of those as whenever we are doing something.
Exactly right. Something. Exactly right. But it can impact your operation. You know, another example would be around people or talent in your business keeping that good talent. It’s hard to do that in a business in this day and age, especially when jobs seem plentiful. People are working remotely and they don’t have to look for a job just down the street or even in their city or state or country.
So the options for employees to look elsewhere are always much more plentiful than they used to be. So employers have to watch out for that and have to try to stay ahead of creating a great environment for people to work in, giving them challenges, helping them to develop, and paying a competitive wage. And that’s just now much more central to most businesses is keeping the talent.
So, you know, another example couple of others we could mention would be intellectual property risk. So what does that mean? Do your secrets get stolen? So you want to keep the things that are proprietary within your walls. And maybe there are protections legally, but there might be just protections in terms of how you control information from getting out.
Yeah. NDAs.
Yeah. NDAs a non-disclosure agreements, so there are different ways to handle information that is important to the business and needs to be kept private. Your clients can be a source of risk. So what do I mean by that? We have just fantastic customers. We work hard at getting fantastic customers.
Yeah, We do.
We focus on small business, which tends to mean that we service a lot of different companies. We’re not tied up with one big corporation as our big customer. For example, I’ve been down that road before. It’s a highly risky endeavor for a business because if that business were to go away or be postponed, your whole business could be at stake.
You’re counting on one or two suppliers.
So not that in every industry, in every situation, you can avoid that type of thing. Having a big customer can be fantastic. From an, I guess, opportunity point of view. But there’s risk and you have to kind of weigh both sides of it and then say what would happen if business were to slow down?
What would happen if our key point of contact that that client left the organization? What can we do to try to mitigate the potential of that happening? Well, maybe it means you make deeper relationships with that customer or you look for another big customer that sort of offsets the risk. So if you had two big customers, one of them was slow down, your business is still able to succeed, you know, So a lot of different types of risks that you would consider internal.
All right. So that’s a lot of internal risks. And I know there are more. We could probably just do a show about those. So what about external risks, though?
Yeah, external risks are threats from outside the organization. In most cases, you have no control over it. Internal you have a little more control. But say the economy, the economy slows down. Is that your fault? No. Could you have avoided it? Not really. Can you plan for it? Can you deal with a slowdown in the economy? Have you prepared for it? Well, by thinking through what would happen if the economy or our sector of the economy were to slow down, How might we respond? Would we want to try to get a different line of business to kind of back up a slowdown?
Would we want to try to reduce some of our fixed costs so that we weren’t we didn’t have a lot of expenses going out all the time? So, you know, again, as planning for the what ifs. Yeah. You know, another example, you mentioned supply chain disruption earlier we were talking about COVID and the impact it’s had on so many industries and it’s still, you know, occurring.
You know, there’s so much disruption. It’s so hard. It’s so hard to find somebody to work on your house.
Navigating this. It is just every sector of your life.
Everything and you try to trace back, well, why are we in this situation where it’s hard to find help, hard to find parts, hard to find materials? It’s not just at a personal level, it’s at the business level.
Well, you kind of trace it back to the business relationships and businesses that we all depended on. You know, some of those companies aren’t in business anymore. Some of those individuals aren’t in business anymore. So how do you deal with that? Well, maybe if you have a key product that you purchase or a service that you purchase, you want to have a backup.
You know, maybe you don’t give 50-50 split your business between two sources, but you might do 80-20 so that you have a second source kind of already qualified up to speed. And if you needed to adjust, you could do it. You’d have that backup plan.
You wouldn’t have it. Maybe you won’t be at full production. But you certainly from a manufacturing standpoint, you have something where you’re not just standing still.
Yeah. Yeah, for sure. Well, and then I guess back to the broader market situation. Market demand goes up and down sometimes you can understand it that you can kind of say, well, that’s because of a shortage in some kind of raw material.
Or maybe it’s a major competitor who has come in and is now starting to steal some of that business away.