A COVID framework is a lens to use RBPS and RBDM. ISO 31000:2018, an international standard, is a simple risk framework. Risk management, both upside and downside, can be defined as the ability to reach an objective, solve a tough problem, or make a smart decision. ISO 31000 has the following steps:
- Communicate and Consult. You solve problems or make decisions because someone has an itch, pain, need, want, expectation, perception, or requirement. Understanding and figuring out what problem to solve, what pain needs to be relieved, or what itch needs to be scratched is the first step in the RBPSand RBDM This step explains what problem we are trying to solve, why we are solving it, how we may go about solving it, and how to make a decision.
- Establish the context: Years ago, I was told understanding context is worth 20 IQ and EQ points. Context provides understanding of the importance, meaning, purpose, and value of the problem to be solved or decision to be made. Context allows us to process the right information, understand risks, analyze events, perceive obstacles, understand VUCANs, learn from mistakes, and do the right things to meet the objectives. This is a critical point because the human ability to nuance context separates us from smart machines – at least for now.
- Identify risks: Think of risks as hurdles, impediments, or obstacles that are in the way of a finishing a project, reaching an objective, solving a problem, or making a critical decision in COVID time. There are lots of risks. It’s critical to separate the critical few risks from the insignificant many that get in the way of what you want to do. So, pay attention to what matters.
Analyze risks: Risk analysis involves understanding the type, extent, and nature of the risk and obstacle to solve a problem or make a decision. Think of risk in terms of two factors: likelihood of the event and possible consequences. RBPS and RBDM consider both positive and negative consequences. Risk analysis is critical to determine if a problem can be solved or decision be reached. RBDM was relatively straight forward a dozen years ago. Risk likelihood and consequences could be evaluated fairly simply. Many problems had a cause and effect relationship. A or B or C would cause D. Decision making in COVID time is very complex with dependencies, interdependencies, cascading, and other factors.- Evaluate risks: Risks are always evaluated based on a VUCAN’s risk appetite or tolerance. Risk tolerance is the acceptable level of variation a company or individual is willing to accept in the pursuit of a specific objective. As a recommendation, if there’s residual risk beyond your tolerance or appetite additional risk mitigation might be applied.
- Treat risks: Risk treatment involves 4 RBDM options: 1. Avoid; 2. Accept; 3. Transfer; or 4. Reduce or Control the risk. Let’s look at each in COVID time: Risk avoidance, think FODA, is the decision not to do something. Risk acceptance, think go-for-it, is the decision to do something usually because it’s acceptable to your risk tolerance. Risk transference, think it’s now yours, assumes someone else may assume part of the risk. Risk management, think FOBO, is the decision to reduce the risk through eliminating obstacles, reducing likelihood or reducing consequences.
- Record and Report: This step involves sharing your RBPSand RBDM with critical parties such as your significant other.
- Monitor and Review: VUCA Risks change. So, risks have to be monitored and reviewed all the time.
Work Lesson Earned: Think about your RBPS and RBDM in COVID time. Do you react or respond to COVID challenges? How do you decide?