Managing Risks Makes Good Business Sense

Risk management has made front line news again over the past few weeks. Beyond politics and ethical considerations of medically assisted deaths to the striking of a Risk Management Committee by the International Equestrian Federation (FEI) in the wake of three deaths, both not-for-profit and for-profit businesses are noting the importance of upping their risk management game. The timing couldn’t be better.

Canadian sport organizations have been fortunate to access the Canadian Centre for Ethics in Sport’s Risk Management workshop to support their risk management efforts. Since 2007, over 40 National Sport Organizations (NSO) have participated in the two-day workshop designed to help sport leaders identify risks, document current risk treatment strategies, and uncover possible new solutions. Drawing from international best practices, these workshops have proven to be an invaluable learning experience that not only support individuals in making better decisions but formalizes the organization’s approach to managing risks. In today’s world with increased complexity and the ever-present threat of legal action, managing risks is a smart way to enhance business performance.

As the lead facilitator in the Risk Management workshop, I have noted a number of high level risks that cut across all NSOs. While each NSO has a different tolerance for risk, many of the solutions identified are applicable and transferable from sport organization to sport organization.  The workshop allows participants to uncover the risks that have been ‘keeping them up at night’ and work through current mitigation strategies, many of which require tweaking to deal with current issues. The added benefit is to learn from the mistake of others as the facilitators share risk treatment solutions that have been tested. Some of the high level risks that serve as distractions to sport leaders include human resource management issues, single source revenue stream, growing expectations from stakeholders, dealing with disputes, and poor governance.

As Ottawa Citizen journalist Andrew Coyne wrote “There’s nothing necessarily wrong with taking on more risk; provided you know what you’re getting into, that you can tolerate the extra risk … and that the returns are worth it.” This requires conversation to ensure there is a shared understanding among the Board and senior staff of what the risk tolerance is. Too often, this conversation occurs in the midst of a crisis, when emotions are high and when decision-making capacity is low. To reduce the risk of making poor decisions, I recommend that NSOs employ the following steps to not only reduce risks but increase the likelihood that they will achieve their desired outcomes.

Step 1: Participate every 4 years (just like strategic planning, there’s a shelf life to consider) in a risk management workshop that helps you re-fresh your commitment to risk management. If you haven’t participated in the CCES’s Risk Management Workshop yet, you can contact Megan Cumming at mcumming@cces.ca to find out more.

Step 2: Have a risk management policy that outlines your risk tolerance, the process you use to identify, measure and monitor risks, and your approach to communicating risks. You can review risk management resources here.

Step 3: Document your risk management efforts in a risk registry that captures the high level risks; rates them; lists current mitigation approaches; and documents possible other strategies. This effective tool serves as a placeholder to capture your organization’s risk management efforts in a documented and formalized way. It can also be a useful reporting mechanism between the Board and the CEO.

Step 4: Ensure you have identified and defined a core set of values that speak to your beliefs and that you actively work to embed in your culture. Managing by values is one of the most important risk treatment strategies.

Step 5: Adopt a learning mindset as part of your culture. Being risk aware means being able to have the difficult conversations required to learn from what didn’t work well. In addition, some of the latest trends are integrating a risk management conversation as part of the organization’s strategic planning efforts.

Risks are everywhere and they are ever-present in sport. Having a sound approach to managing risk decreases the likelihood that you will spend your valuable time reacting to issues. This means you get to spend more time focusing on the reasons you chose to work in sport in the first place. Happy to discuss how you can improve your risk management efforts at dbl@sportlaw.ca.

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