Sport is full of risks. This we know well. We expect coaches and athletes to take risks daily in pursuit of performance excellence, and yet more often than not, those responsible for managing sport organizations can be described as risk-averse. The irony is not lost on the partners of the Sport Law & Strategy Group. We are often called upon to “put out the fires” or “to make it go away”. Enough already! There is a better way and for over 20 National Sport Organizations (NSOs) that have worked with us and True Sport over the past four years, we believe we have found one. It’s called values-based risk management.
To ensure that I keep up to speed on the subject of risk management and its many evolutions, I’ve been following Melanie Lockwood Herman, executive director of the Non-Profit Risk Management Centre in the United States. Her monthly blogs and webinars have been very informative and have helped to authenticate what my colleague Rachel and I have been advocating for the past decade. Sport organizations, like any other non-profit, require smart solutions to today’s ever-changing environment. One smart business solution is values-based risk management. Academics and consultants are scrambling to outdo each other with fancy terms like ‘enterprise risk management’ or ‘strategic risk management’ or ‘ risk intelligence’ but at its core, managing risk is about assessing the probability and consequence of an issue that is keeping you up at night. And who knows better about this than sport leaders?
Melanie reminds us that smart leaders need to take risks. In order to effectively compete in the 21st century, leaders will need to adopt the creativity and nimbleness required to respond to rapid changes in their environment. The process we at the Sport Law & Strategy Group use to help leaders make smart decisions is based on the tenets of risk management and grounded in the organization’s mission and values. Combined, this offers up a robust decision-making matrix that can help to ensure that organizational leaders are using common approaches when determining future action. Given that most NSOs empower staff and volunteers to make hundreds of decisions each day, the possibility of making decisions according to a common set of values is intriguing. It’s our belief that in so doing, leaders make decisions that take into account their organization’s culture and values, and benefit from the often multiple perspectives that were engaged in determining them.
Below you will find a core set of decision-making principles that have been adapted from some of Melanie’s webinars and more importantly, are derived from the years of experience that we have acquired in helping smart leaders make effective decisions.
Principles of the True Sport risk management process:
1. Know, understand, and communicate your organization’s mission and values. If people understand only this, the risk of making poor decisions falls dramatically.
2. Understand the environment in which you operate and ensure that you are using best available data to inform your decisions. In particular, smart Boards scan the environment at each meeting to influence their discussions. (Some prefer to use the tried and true SWOT analysis. We also like to use a SOAR approach that has participants explore strengths, opportunities, aspirations, and results).
3. Anticipate and plan for a number of possible scenarios when speculating about the future. The process of scenario planning can help you identify what I like to call ‘sticky solutions’ that can be used to address a number of issues.
4. Keep track of and honour the wisdom that resides in your organization’s history. Many NSOs have been around for decades (some, for even more than a century!) and have a wealth of knowledge from which to draw. Remember we are bound to repeat mistakes of the past unless we acknowledge and learn from them.
5. Ensure that you incorporate a diversity of perspectives into your decision-making process. Research shows time and again the benefit of having multiple worldviews at the table and how it enriches the overall outcome.
6. Ensure that risk management is being discussed at all levels of the organization. The Board should be clear on what risk areas it should be focusing on, which areas staff will be managing, and how committee members can benefit from risk analysis as well. We encourage organizational leaders to scan for risk areas using the following lenses that were developed recently with Cross-Country Ski Canada: operational/ program risks, compliance risks, communications risks, external risks, governance risks, financial risks, and strategic risks.
7. I can’t overstate the importance of education and communications in the risk management process. To effectively manage risks, staff and volunteers need to become aware of the language, process, and possible strategies available to them. To help avoid, reduce or plan for risks, organizations need to continually communicate to their various stakeholders. In this instance, an ounce of prevention is worth a pound of cure.
8. Embrace the unknown. So many of us fear not knowing what lies ahead … let’s face it, we live in a very uncertain world. Risks are a significant component of that uncertainty but so too is opportunity, innovation, aspirations, and path-breaking results. By planning for various scenarios including the possibility of failure, you can better inoculate yourself against the most catastrophic outcomes.
9. Recognize that you are already managing risks. We all do it. From the moment we awake each day we are making hundreds of choices. What risk management does is make explicit what is often implicit. In today’s world, sport leaders need to demonstrate accountability and transparency when making decisions. The risk management process allows you to document and rationalize why decisions were made and the criteria they were based upon. All very helpful when thing go awry or when insurance premiums are on the rise.
10. Finally, risk management helps you distinguish between what one ‘must do’ (think compliance issues, legal requirements, etc.) and what one ‘ought to do’ (culture, ethics, values, principles). Both are important – especially when our sector demands so much of us. If sport is to live up to its true potential, then managing risks, I believe, can help increase the effectiveness of the 34,000 sport organizations that make the system possible.