The discipline of risk management can help your organisation plan for future uncertainty, however there are many examples of organisations and indeed industries that had risk management in place, and still suffered losses from unforeseen events. The banking and finance sector is currently a good example as it continues to suffer from the global credit crisis. While organisations in this sector have statutory obligations to manage risk, they clearly did not see this crisis coming. They complied with minimum statutory risk management reporting requirements and managed their ‘known unknowns,' but failed to prepare for major changes to their economic environment and breakdowns to their credit supply chain. They have failed to manage the ‘unknown unknowns.' In risk management the ‘unknown unknowns' present our greatest challenge, as to effectively manage risk, we use our experiences of the past to help predict the future. Clearly the likelihood of a credit meltdown of this scale had never happened before. Organisations in this sector and those that rely on credit, lacked ‘resilience.' In risk management circles the term ‘resilience' is starting to gain traction. Not only does it imply a more positive connotation than risk, it suggests that resilient organisations can not only deal with unforeseen circumstances and return to their pre-incident operational capacity (as in business continuity), but can respond to major unforeseen changes and recover to a new operating capacity and environment.
For example, such changes could include major long-term economic ‘shocks' to affect the viability of international entertainment events touring Australian venues, or long-term worsening in global security conditions preventing international air travel and adversely affecting attendance by athletes at world class competition affecting the standard of Australian sporting performance.
The challenge for sport, entertainment, venues and events is to combine the principles of risk management, business continuity and change management to ‘roll with the punches' and build organisational resilience.