The highlight - and I use the word loosely - of this week has been spending time with Michelle in Customer Services who is surely one of the world’s most defensive women.
“So you are asking me to be a fortune teller?! If I could predict the future I wouldn’t be stuck behind this desk, would I? I’d be on my yacht in St Tropez living off my lottery winnings!” was Michelle’s response when I gently told her that her key risk indicators currently report risks which have already materialised, rather than tell us which risks are increasing or decreasing.
Whilst that might be fine as a retrospective performance indicator, we need something a bit more predictive for KRIs.
Michelle is one of our longer serving managers in Customer Services. She has always struck me as a woman who is beyond the help of stress management techniques. She’s permanently ready to blow her top. Her job involves sorting out problems; she is always over-worked, she goes around cleaning up the mess others make and secretly I think she loves it.
I explained further,
“Put simply, if you want to know whether the thing we don’t want to happen - the risk event - is more or less likely to materialise, we need to measure the cause. If you want to know whether the risk event will be a whopper or not, you need to measure the causal factor that determines the size of the problem.”
“Sounds logical” she said.
“So for example, while someone probably needs to know the amount of money lost to fraud over the period, that is probably not the best way to find out whether the risk of fraud looks to be increasing or decreasing in the future. If we can look forward rather than backwards, we stand a fighting chance of stopping some of these undesirable things happening in the first place.” I explained.
“You mean that by focusing on causal factors you can reduce issues and thereby reduce my workload?” she asked sceptically.
I wondered if she was about to out herself as someone who was so worried about losing her job that she’d rather there were lots of issues to deal with.
“Yes.” I told her. “That’s the vision - more issues prevented before they occur, a better functioning department and less unpaid overtime for you. Can you tell me about something that’s a right pain to you and we can use it as an example?”
Michelle looked pensive and leant in, conspiratorially.
“You know what? I’ve noticed that usually about 10% of our complaints result in refunds. But that percentage shoots right up to about 35% in our two busy seasons. The number of complaints doubles in line with sales, but the refunds more than triple as a proportion. Why do you think this is?”
I had a feeling she was about to tell me.
“It’s not because the product gets a lot worse - our quality control is stable. Angela’s team who deal with complaints just can’t cope with the sudden spike in workload, so they do fewer checks and just pay out. I’ve spoken with them about it before. The refund figures can really impact the profit margins in those months.”
Beautiful, I thought. What a text-book example.
“Can we measure that so we can see the problem coming before it hits us?” I asked. “Let’s measure sales volumes and complaint volumes. That way as we see the problem coming, like a tidal wave building, then we can ask for some support to bolster Angela’s team and hopefully keep the refund levels down.”
Michelle smiled. I don’t think anyone’s ever seen that before.
It’s lovely when you can see a concept click into place with someone you’re talking too, particularly when they really see how risk management tools can help them gain better control of their work and ultimately their life.
Who is the Secret Risk Manager?
The Secret Risk Manager is a senior risk professional working in the City. Over the years, they’ve seen a variety of risk practices - good, bad and ugly - across a variety of industries.
Like many risk professionals, the Secret Risk Manager’s CV has a large unspoken element. They are called upon to be in turns, therapist, coach, detective, mediator, behavioural scientist, parent, mind reader, futurologist, story-teller, philosopher and diplomat.
These articles do not pretend to constitute advice, but only to provide a frank and hopefully thought provoking look into the often frustrating world of those people who help organisations manage their risks. The subject matter is experience based, but fictional.
Any resemblance to actual incidents or persons living or dead is purely coincidental. But let’s face it, there’s not much new under the sun so you’ve probably seen it before.