‘Just In Case’ Management: How Covid-19 is making us think differently about risk and resilience
15 June 2020 -
The days of just-in-time and an obsession with ‘lean’ thinking may be over, says a noted UK risk expert
On 11 June 2020, the UK government announced that it would not be pursuing its plans to nationalise the probation services. Instead, Justice Secretary Robert Buckland said that the service would be fully renationalised, with prison authorities commissioning rehabilitation services locally.
Describing this significant change in government outlook, Buckland said: “This will give us a critical measure of control, resilience and flexibility [our bold] with the services that we would not have had were they delivered under 12 contracts with a number of organisations.”
The Covid-19 crisis has forced private and public-sector organisations to change in ways they never expected, calling into question the old norms. All leaders are scrambling to adapt to the new normal and find ways to survive. And the impacts on how we manage risk, resilience and supply chains may be the most profound of all.
Estelle Clark, governance, assurance and improvement strategist at Strategic Arrow, believes these changes are needed simply because the old techniques no longer work.
“Covid-19 should make us think differently about risk,” she says, citing traditional risk management techniques as just one example of business practices that don’t work well in current circumstances.
As such, Clark describes conventional risk meetings, where risk managers and business leaders sit down every three to six months to discuss risk registers, as “inappropriate” and “almost irrelevant”.
“All of the risks we are seeing around the pandemic are materialising simultaneously and some of them are re-materialising every day,” she says. “So using those traditional methods to identify risks and help you manage them is just no longer helpful.
“When the information surrounding risks is materialising at the same time as the risk itself, you need to be working at a different clock speed, and that requires you to look at risks from a different perspective.”
This fresh perspective, Clark says, needs to incorporate a multi-stakeholder view, in order to analyse the connections between different stakeholders as they develop, allowing you to identify risks before they become a serious, and potentially existential, problem.
“One of your core competencies now needs to be becoming skilled in this re-evaluation of everything that is changing and understanding the state of your business in a world where suppliers, customers and staff are here today and gone tomorrow,” she says.
This more fluid risk landscape means that businesses will no longer be able to sustain the just in time philosophy that served them so well in driving down costs and boosting efficiencies. Instead, Clark says businesses will need to be more risk aware in their business thinking, and she sees resiliency and contingency planning rising up the corporate agenda as a result.
“This resilience, which comes from having something put aside for a rainy day and having back up suppliers and back up products, could potentially become a key performance indicator for organisations, much in the same way that during the financial crisis liquidity became so important for the banks,” she says.
Finding the Balance
Clark says that while she fully understands the benefits of lean techniques in driving efficiency gains, the changes brought about by Covid-19 have proved that many organisations have taken things too far.
“When you start to push lean thinking beyond the flow of the supply chain and ‘just in time’ becomes an organisation-wide mantra then it becomes really dangerous, and the organisation has no resilience,” she says. “There needs to be a rebalance between just in time management and just in case. Some organisations have gone too far in one direction, without thinking about what would happen when something like this pandemic hit.
“Managers will need to express business ambitions in terms of resilience, and not just cost, and to set and measure performance accordingly. They will need to set a compelling vision for this change in corporate culture and to motivate their people to achieve it in a way that extends beyond the end of this pandemic.”
Why not check out Checklist 264 from ManagementDirect, which explores strategic risk management tips?
CMI members can also log into ManagementDirect to find more invaluable checklists about risk assessment and supply chain management, for instance. Right now, members may find checklist 056 on “Health and safety: undertaking a risk assessment” particularly useful.