As a Trusted Advisor in Risk do you focus on all the decisions the business is making or do you focus on the big issues?  



I bet you thought to yourself, of course I focus on the big issues, they are the ones that count.



Now, what if I asked you, “as a Trusted Advisor in Risk, do you VALUE all of the decisions the business is making or do you only focus on the big issues?” Now you are saying to yourself, “of course I value all of the decisions and I value the bigger ones more than the smaller ones."



Now let’s think about the decision to expand capacity of a current manufacturing process.  Let’s assume to do this will cost of the order of $100M and will take 12 to 15 months from decision to move ahead until the first product from the expanded facility is being shipped to market.  



The first decision, to expand the plant or not is obviously the biggest one. However, once the decision is made, there will be many thousands of decisions being made by staff, contractors and suppliers before the plant is in full production. There will be decisions about technology and about which supplier to use. There will be decisions about timing of purchases and modes of transport. There will be decisions about hiring additional plant operators and how best to train them.

 

Are you getting the same feeling that I am getting? The size and the importance of decisions is reducing over time, however, their numbers are increasing. I have portrayed this as a Decision Value Curve (see diagram). My point is, that the 1,000 decisions at the end of a project can approach the value of the big decisions at the start of a project.

Value Diagaram

What does this mean for you?  Yes it means you had better get the big decisions as right as possible. However, it also means you had better have all your people making good decisions given the sheer volume of them being made. One poor choice can set a project back a month or render a desired functional outcome as no longer possible. Therefore you want good risk-based decision making by all your staff throughout the organisation.



As a Trusted Advisor you and your team of advisors or Risk Champions should be helping to ensure you have staff across the organisation highly capable at decision-making under uncertainty – yes, that’s Risk Management!

Comments are closed.

Get in Touch