By Dave Chapman

MAKING RISK MANAGEMENT AN INTEGRAL PART OF YOUR MANAGEMENT PROCESS

Historically, Risk has had different levels of management attention, depending on the flexibility of what is required in reported performance. The more important potential impacts either optics, or in terms of performance leadership, the concept of Risk takes a different from of attention.

There are two types of Risk:

1. Risk that is to be avoided at all costs
     a. Example - develop new offering without the knowledge of the buyers unmet needs.

2. Risk than can lead to new innovative capabilities
     a. Example - develop new capabilities that buyers have not thought of; they find impressive and validates their support.

Wisdom and KEP™ (Knowledge Experience and Performance ) is required to identify and understand the differences. Based on number (2) above, Risk can be an asset. But only if there is a process that is effective which identifies what it is, where it is, and what and how to convert it into economic value.

First and foremost is developing a Risk Based Management System as part of the basic and fundamental business process needs that focuses on the following:

1. Identify the required missing knowledge.
     a. Independent studies have validated the following:
          i. 61.2% to 64.3% of the enterprise’s organization faces making crucial decisions without the correct information.
          ii. There is 192% of data available vs. used. So there is nearly two times the amount of data available vs. used.
          iii. There is only 33% to 44% of the knowledge available vs. required to make accurate and more precise decisions.

2. Mission the IT organization to deliver the following:
     a. Deliver the right information to the right people, with the right quality and reliability, at the right time.

3. Determine that the Management team has the KEP™ to manage the process.

4. Mission the organization to think, identify, manage, measure and report risk.

5. Acquire Risk base tools to aid in developing the strategy and executing the process.

This test of just one element of Risk Management Metrics called, Time to Market (TTM), is just for the Buyer Needs Assessment.

1. Do we know the important unmet needs of the Buyers?
     a. Do we know who the Target Buyers are, and will they buy now?
     b. Do we know what message Buyers want to be able to say about their solution?
     c. How many Buyers will purchase a solution for their unmet needs?

2. Do we know how Buyers will view this offering as a solution to their unmet needs?
     a. Do we have internal bias as to what Buyers and Customers want or are willing to buy?

3. Do we know what our Sales Cycles are going to be and who we should sell to?

4. Do we know what our Brand Index is, in this market, for this offering?

5. Do we know what our real Value Propositions are in the mind of Buyers?
     a. Which Value Propositions are important and how do they score their current solution?
     b. How important are they and what is the gap between what they have and what they need?
     c. Which are not important?

6. Do we know what is the Risk in the mind of the Buyers / Customers to purchase our offering?

7. Do we know what the Risks to achieve the Revenue Plan are?
     a. Is the Revenue Plan achievable given the enterprise program for this offering?

8. Do know the threats and impacts of the competition and what their current performance scored by Buyers is?

9. Do we know what the Market Launch Strategy should be for maximum impact?

10. Do we know what the Buyer’s criteria is for purchasing this offering / solution and is the enterprise ready to support a purchase?

SUMMARY

Adopting risk based management strategy means that its awareness has to be elevated across the entire enterprise. It takes a vision and commitment to change the infrastructure’s thinking such as the mission of marketing from promotion, to understanding in depth market and buyer needs. It means that the Market Message is treated as a science; understanding that it effects the sales cycles and brand; that there can be a gradual and unsuspected erosion of current solutions in the market; and that Web 2.0 and Web 3.0 will fundamentally change the relationship and connection to Buyers (which we will discuss in one of the next articles).

Step one then is to pick a few of the important metrics such a Time to Market. Step two is to identify the knowledge required to make this into a strategic advantage. Assign ownership to identify the required missing knowledge and where the risks are.

The secret is to start with important discussions that occurred without the data, information or knowledge required, assuring there was no unidentified Risk.

Get the high KEP™ personnel assigned to identity and validate what was missing in order of priority.

The next article will focus on some of the Key Metrics to make part of your Risk Management Suite and its impact on where one spends their enterprise resources.

XONITEK Corporation is a management and technologies consulting firm with a world wide presence and a reputation for excelling in the optimization of business synchronization .