I’m often asked about the biggest risks that I see. It’s a difficult question as, let’s face it – there’s no shortage of risks that could keep risk managers up at night. But the most significant risks are those that can transcend individual industries and are common – in some form or other – to all of us, whether at work or at home. From significant weather events to fires, crippling cyber-attacks and, of course – new to this generation – worldwide pandemics, there is a long list of threats to our businesses and the people we work with and/or employ.
What is easier to answer is what can be our greatest challenge in dealing with risk. For me, it can be summed up in six words: ‘it will never happen to me’. This optimism bias, hard-wired into most of us, giving us the belief that we are more likely to experience positive rather than negative events, the thinking that bad things only happen to other people, other businesses.
Don’t get me wrong – I think a positive outlook is a good thing. But while hoping for the best, in my experience it pays to be prepared for the worst.
Sadly, I see many losses across the different industries that we support. Fire, flood, theft, accidents – these events occur all too often and for many businesses, the larger events can be devastating. There’s an inverse relationship in these situations in that the less prepared businesses are, the more enduring the damage.
I’ve worked with many businesses over the course of my career and sometimes the most prepared are those that have, sadly, endured a significant loss and have seen and felt the impact it can have. Unsurprisingly, they are also the businesses that now manage risk the best, invest where they need to, and understand the need to be prepared.
This article isn’t intended to spread negativity – just the opposite: I’m hoping that by considering the potential risks to your business, your people and your customers, you manage to prevent the worst from happening.
Instead of thinking, ‘it won’t happen to me’, just add, ‘but what if it does?’ Question yourself, are you prepared? Could your business sustain a high-impact event? What can you do now to prevent it from happening, or at least mitigate the effects of an event if it does? The outcome could be the difference between misfortune and catastrophe.
We all need to be positive – now more than ever. The good news is that many losses are preventable. And I’d argue that good risk management actually sustains a positive outlook. By objectively considering how you manage risk (recognising and adjusting for optimism bias), you can minimise the probability of those risks materialising, improve your ability to manage them if they do, or even prevent an incident from occurring in the first place.
Over the course of the next few months, Aviva Risk Management Solutions will be providing articles and guidance on how we can all protect ourselves against a wide variety of risks, and even prevent them from happening in the first place. In the meantime, you can access all our risk management and prevention solutions at www.aviva.co.uk/risksolutions