RISK MANAGEMENT

Peter Mahoney

8 months ago

RISK MANAGEMENT - Account Management Gold

Risk Management is a process which enables you to identify, assess, classify, action & monitor any identified risk in order to either eliminate, reduce, share or maintain it.

So, there are always choices:

Avoid the risk by eliminating the probability or by not undertaking the activity in the first place.

Reduce the probability and/or severity of the risk or extend the timescale of the specific activity.

Share the risk with a third party by either transferring it (outsourcing) or taking out insurance cover.

Keep the risk at its current level of probability & severity, accept the potential consequences and budget accordingly, together with contingency planning.

This blog explains how to manage risk for a client account overall. Risk management processes for work/service/people/product contracts and sales & marketing are covered here

The following definitions need to be understood before looking at risk management in more detail:

Qualitative Risk Analysis (subjective/manually classified)

prioritises and scores individual risks regarding probability and severity of impact

Quantitative Risk Analysis (objective/automated numerical analysis)

significant risks can be further analysed to identify potential outcomes for the client account overall, sales & marketing or individual contract levels. However, this type of analysis is considerably more complex & time consuming compared to Qualitative Risk Analysis and often requires specialised software

Residual Risk

the extent of risk remaining after mitigating action has been taken and controls put in place

Risk Tolerance

levels of risk which are acceptable to live with

All things considered, Qualitative Risk Analysis is the most practical form of risk management for client account management & development.

So, as a degree of risk exists in everything we do, your company will need to decide what are acceptable levels of risk to live with otherwise you’ll be pre-occupied with risk management to such an extent that time, resource and/or cost cannot possibly justify.

It is also important to remember that some risks can have a positive outcome (where there is a chance to benefit) while others have a negative outcome (where there is a chance to damage).

There are also two categories of risk:

Recurring/Preventative – predefined risks (which are maintained in a Preventative Risk Register [PRR]) are searched for each time there is a new client account, sales & marketing activity or individual contract.

New/Reactive – new risks which occur unexpectedly and are added to the PRR as part of the commitment to continuous improvement.

Also, some risks will never be eradicated. Indeed, many will not need to be, or eradication cannot be justified. They’ll just need to be managed/contained, or there may be some risks which are completely outside your control that you just need to keep a very careful eye on throughout.

There will always be risk so please just accept it!

Some example checks and tips are given below:

Overall Client Account

each individual risk and sub risk will need an estimate of the likelihood of it occurring together with establishing the severity of impact.
to do this there will need to be a rigorous assessment of the different potential outcomes and options on the best way forward in terms of the extent of time, resource and cost which would be justified in eradicating, reducing, sharing or just maintaining a particular risk at its current level.
as the account manager works through all risks and sub risks, each will be classified: green = low risk, amber = medium, red = high
reducing just one of the two main aspects of risk (likelihood or severity of impact) may be enough to bring the risk to an acceptable level (residual risk/risk tolerance).

the ‘threats & weaknesses’ identified in the most recent SWOT analysis will be a key input to the risk management process.
the account manager’s regular reporting on various people-related aspects will also keep anyone responsible for people management on their toes.
the account manager will also need to create and maintain a Risk Management Plan (RMP). This will bemanaged in terms of elimination, reduction, sharing or maintaining risks as previously described. Subsequentreviews of the effectiveness of the RMP are likely to identify beneficial improvements in process/procedure which will be part of your Company’s commitment to continuous improvement.
overall performance and suitability of the account manager will be assessed by their own Manager ‘off-line’.
whenever there is more than one risk for a particular activity/topic, the highest risk ‘colour’ must be used.

Also, as significant issues often occur within the supplier’s own organisation and are invariably overlooked, the following areas also warrant close attention:

is the account manager fully empowered or does he/she rely on the goodwill of others?
is there internal pressure to win sales orders in the short term when the account development strategy is clearly based on the medium to longer term (presumably for very good reason!)?
are all current sales bids &/or proposition initiatives genuinely in the best interest of both the client & supplier?

Click here for 100+ checks & tips

Best Practice Quote 10 of 13:

“although often generating significant extra revenue, change is the biggest risk of all and can destroy timescales, jeopardise working relationships & eat profits”

NEXT BLOG: Account Performance Reviews

The complete set of account management components can be found here, all of which are explicitly focused on improving supplier performance and blocking the competition.

As an introduction to these components, I’m writing a series of blogs which I hope will be of value and appropriate for the type & size of your client, prospect and target organisations:

As these blogs are geared to anyone engaged in developing new business with clients &/or prospects, and for ease of context, I’ll regard all readers as account managers because everyone has the same endgame, no offence!

I really hope you, your colleagues & business associates find value in these blogs; please let me know either way. Please also get in touch if you think there might be potential for our businesses to collaborate.

ASPIRE’s MISSION

– to enable Account Mangers & Suppliers to develop long-term revenue streams while minimising risk in all that they do

– to increase profit margins, expand people networks, develop trust, enhance market standing & boost morale/pride

ASPIRE, committed to providing practical best practice to enable you, your team, your company and your clients to exceed business expectations year-on-year