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Organisations with purpose and values fair better in times of uncertainty
Date of Issue: Tuesday, 2 June, 2020
We all remember the financial crisis of 2008. Whilst we also know that Covid-19 has led to both a health and an economic crisis, many organisations are also facing a crisis of purpose. Whilst we face similar risks at this time, we may need to adopt very different strategies to navigate them. At the heart of these strategies should be purpose, and honest and achievable values.
The reality is we are always surrounded by risk - pandemics, climate change, technologies, political and economic changes, societal issues, and cybercrime. We cannot tackle them all simultaneously, but the process in which they are identified and prioritised will be determined by the organisation’s purpose and values.
Indeed, robust risk management can help businesses adapt and thrive. Good risk management maximises chances of success as it helps organisations be fully aware of both the scale and likelihood of the risks they face, whether threats or opportunities.
Successful organisations recognise that businesses are their people. Their commitment, their energies, and their creativity - they are the architects of success. A firm’s team needs not only to understand the purpose and values of the organisation, but how they fit into it: how they can ‘live the vision’.
More than ever, customers will make decisions on which brands to buy based on:
- how they treat their employees
- the impact they have on the environment, and
- how they support their local communities
Businesses that genuinely have a dual purpose, being both a force for doing good to benefit its people, customers, and the planet, as well as being financially successful, are those which are proven to deliver positive results. They focus on all stakeholders not just shareholders which can exploit positive outcomes, as they have a much deeper appreciation and connection with their stakeholders and the environment in which they operate.
Former P&G Global Marketing Officer Jim Stengel puts in his study: “Companies which put ideals of improving people’s lives at the centre of all they do outperform the market by a huge margin, An investment in the top 50 of these companies would have outperformed the stock market average over ten years by 400%”
Businesses that ensures their strategies, culture and risk management practices are inexplicably linked with its values, will benefit from better morale and an ability to attract talented people, and capitalise on opportunities. Employees that feel they have a reason to get up in the morning as they are supporting a purpose helps lead to:
- resilience and sustainable growth
- adaptability at times of crisis
- innovation due to strong team ethics and a commitment to values
- ability to deliver high quality products and services
Covid-19 has proven that values-driven organisations are more likely to be able to adapt and rally to a cause, like many did in response to the UK Government's call for help to boost the supply of critical care equipment to help the NHS deal with the influx of coronavirus patients. This is powerful, as at times of a crisis, customers’ conscience is exaggerated and more concerned that organisations are doing the right thing. When organisations get it wrong, it feels particularly offensive and can have huge impacts on their reputation. However, when they get it right, loyalty lasts way beyond the crisis.
According to David Sommer, Professor of Risk Management at St. Mary’s University in San Antonio, Texas “There is a widespread perception that risk management stifles innovation and isn’t congruent with a rapid growth environment,” He goes on to say, “That is far from the truth. Good risk management maximizes the chance of successful, sustainable growth. It is about optimizing risk and undertaking it with your eyes open, assuring that you are best positioned to respond to adverse developments and exploit positive ones.”
In summary, risk management done well can help organisations exploit and create value. Ultimately, an organisation’s purpose and values will determine managements willingness to accept and take risk. Risk management provides proper challenge to business strategy. Increasingly, businesses are harnessing the power of their purpose and values, focusing on stakeholders and good risk management practice to achieve their objectives, improving their resilience, and withstanding a crisis.
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Risk management is about understanding what might happen. It is about having the skills, tools, behaviours, and culture to be able to make the right decisions, by the right people and at the right time. It has never been so important to have the ability to identify, manage and communicate on risk.
IIRSM courses are underpinned by the principles of the global risk management standard ISO 31000. They are highly practical and use real-world case studies, scenarios, and group discussion. They provide not only a practical and enjoyable experience, but you will gain new and invaluable knowledge and skills that can be applied straight away.
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