Advice on how to mitigate risk in turbulent times

A proactive approach to risk management is essential when navigating a complex global business environment and can provide a foundation for building and maintaining trust – here’s how to mitigate risk in turbulent times

CREDIT: This is an edited version of an article that originally appeared on Management Today

The old adage goes that bad luck comes in threes. For organisations today, which find themselves assailed by challenges related to political and economic turbulence and the escalating climate crisis, adversity seems to be arriving in considerably higher doses.

Yet, in the face of a “wall of interconnected economic, geopolitical, environmental and structural risks”, many organisations still lack a systematic approach to mitigation, crisis preparedness and resilience-building, says Rod Cartwright, founder of strategic communication consultancy Rod Cartwright Consulting.

Analysing five leading reports, he has disentangled the key themes that should underpin any business’s strategy around risk and trust in 2023 and woven them into practical recommendations for leaders. Here are five of the most important.

Relationships are built on trust, and trusted reputations are built on relationships

Consistency, transparency and responsibility are the key drivers of trust, while relationships are the foundations, bricks and mortar that hold a trusted reputation together.

While there can be a natural tendency among leaders to focus on reputation, businesses should give equal weight to relational risk management.

Cartwright says business leaders should ask: ‘As you work to foster trust, are you focusing on building and maintaining positive, lasting relationships rather than obsessing with reputation alone?’

There is no such thing as a PR crisis

Reputational crises are born out of some combination of structural, operational, leadership, behavioural and cultural factors, says Cartwright.

A successful approach to reputational risk management – including crisis planning and resilience-building – must therefore involve all key business functions and be a whole-team exercise.

Say, then do

It is one thing to say and another to do – and a mismatch between the two can create a toxic recipe for reputational crises.

The need to walk the talk with regards to values applies both to corporate behaviour and individual conduct, as the recent crisis at the CBI has brought into painful relief.

Cartwright encourages businesses to ask themselves: ‘What steps are you taking – operationally and culturally – to avoid damaging say-do gaps that can erode trust?’

The best leaders are listeners

Relationship-building efforts and the management of relational risk should be underpinned by a deep understanding of your key audiences.

This, in turn, can be developed using constant social and audience listening and requires both the right systems and the right mindset to be in place.

Always stress test

You can plan until you’re blue in the face, but human preparedness, Cartwright contends, is “only complete when your team has been properly stress-tested together”.

Alongside the right systems, processes and infrastructure, a live-fire simulation is the critical crowning component of any risk management and crisis preparedness strategy.

“Have you put your fully integrated team through the pressure of a real-time crisis simulation to assess strengths and areas for development?” Cartwright asks.