Taming the “Lions” —A Simple Approach to Managing Risk

  • Make Risk Management part of annual and long term planning
  • Select a cross functional team to:
    • Identify Risks
      • Try “What if” scenario analyses or “War games” sessions
      • Great fun and great for team building
    • Analyze and quantify risks
      • Simple spreadsheet: list, number, describe and quantify the impact of the risk
    • Develop action plans for the most critical risks. The goal is mitigation – “lion taming."
    • Regularly track, update and report on status

Keep it Simple

  • Risk management doesn’t have to be an all-consuming process, and not all risks need actions.

Try this simple tool for plotting and prioritizing risks that your team has identified:

  • Proactively address the green box (“Lions”) and ignore the reds (“Lambs”).
  • Monitor the yellows and re-prioritize if things change

Source: Strategic Market Management, David A. Aaker, 10th Edition

A Few Examples: ERM (Enterprise Risk Management) in Action:

U.S. soft drink companies saw the long term decline in carbonated soda consumption as a critical risk to their core businesses.

  • They proactively acquired and built non-carbonated beverage portfolios (waters, teas, juices, energy drinks) which have continued to deliver strong growth.

Coca-Cola partnered with local community resources to address the challenge of distributing its products to remote areas of the globe.

  • Since 2012, Coca-Cola’s “Project Last Mile” has delivered a broad range of vaccines, medicines and medical supplies—alongside Coke products—to millions.

A decade ago, GE faced heavy public criticism and fines regarding its track record and history of environmental issues. The company saw this as a critical long term risk—but also an opportunity.

  • GE created and launched its Ecomagination line of environmentally friendly products, now a multi-billion dollar business segment. (Source: AICPA)

Hoffer Plastics Corporation identified the long term risk of weather related power outages in the Midwest—a clear High Impact, High Likelihood “Lion."

  • Hoffer’s founder invested in an onsite power co-generation plant that can also provide electricity to the surrounding community in the event of an emergency.

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