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The difference between Risk Management and Crisis Management

The difference between Risk Management and Crisis Management

Hello and welcome to this session. What we are going to talk about today is the difference between risk and management and issue management or in another term crisis management. When it comes to risk management what we are trying to do is think about the things that can go wrong. Now if we do that proactively and in advance, then we have an opportunity to develop a range of options, select the most appropriate options and then to implement those options. And if all of our work goes to plan we will never ever see that incident happen. I have talked about the risk management paradox before, but in this case you probably won’t see that incident occur.

So what’s the difference between risk management and incident management or crisis management? Well crisis management you are backed into a corner. How many of you have been involved in a crisis where it is all hands on deck? And so what you are doing is, you are taking people away from their normal task, there business as usual, and you are bringing them on to manage the crisis, and of course that’s going to create a back log. Your options are severely limited in terms of how you are going to deal with the crisis. And here is the big thing, studies are starting to been shown, that it costs anywhere as around ten times as much to deal with an incident than to prevent the thing happening in the first place and spending the money upfront.

So the difficulty of course that we have as risk managers, is being able to convince our bean counters or our executives that spending this bit of money upfront could prevent this happening which is going to cost us ten times as much, is going to have a huge impact on our reputation, is going to lead to compliance failures. Because the argument they may have is well how could we ever know that this is going to happen? Well as we have seen so many times before, this whole attitude of this will never happen, often leads to disaster. So remember, ask the question ‘what happens if’? So if you could do something to avoid that happening, then do it in advance. Now you can’t say for certainty that, that event was ever going to happen but I can guarantee you never having to deal with that event is hell of a lot better than having to deal with the event after it’s occurred than trying to bring yourself to business as usual. So think about making sure that we look at risks versus issues and try and do a lot more fire prevention than fire-fighting and that way our organisation is going to be less in crisis management and is going to achieve our objectives a lot better. So that’s all for this session, and as always let’s be careful out there.

Written by Leena Renkauskas

Rod is an accomplished risk consultant with extensive experience in the delivery of professional consultancy services to government, corporate and not-for-profit sectors. Rod takes every opportunity available to ensure his risk management knowledge remains at the ‘cutting edge’ of the discipline. Rod’s Risk Management expertise is highly sought after as is the insight he provides in his risk management training and workshop facilitation. Rod was recognised by the Risk Management Institution of Australia as the 2016 Risk Consultant of the Year and one of the first five Certified Chief Risk Officers in Australasia.