I love using this example of why you need to agree, and to operationalise, risk appetite for staff – to align the poles so to speak. It is not a corporate example. It is from every day living. Well not quite every day, but you will get the gist.
I was “up the coast” one summer. A term well understood for those who live in Sydney as it covers anywhere from the Central Coast to the Queensland border. As with most holidays you get a good story or three. One of mine is the quintessential Aussie story as well as a wonderful depiction of why leaders in organisations need to know staff are operating within the bounds of the leadership team’s appetite for business.
My friend (let’s call him Mike) and I were walking towards a pub. A few of us were taking interest in an old Valiant (an Aussie-made car by Chrysler until 1981) outside the pub. Soon Mike and I were looking at a snake poking its head out from under the wheel well on the back left of the car. My friend decided to take a closer look and I was ready with the camera in case I was able to capture a spectacular moment.
(Un)Fortunately nothing happened to my friend and we went inside for a beer. A while later I heard a patron speaking to the publican.
Patron: ”Did you hear Frankie from up whoop whoop way came into town with a python wrapped up in his wheel well?”
Publican: “You don’t say.”
Patron: “Yeh. Bazza grabbed it and has let it out back in the bushes.”
Publican: “Where in the bushes?”
Patron: “In the beer garden.” (A beer garden is an outside area for food and drinks at an Aussie pub).
Publican: “You can’t let a bloody snake loose in the beer garden! It’s irresponsible!”
Not long after hearing this interaction, Mike and I had to get moving. I ducked around the corner to a shop while he headed to the car. By the time I met him in the car he was laughing his head off. Apparently, the publican had just walked past with the snake in a pillowcase. My friend explained what had transpired.
The publican had gone and found Bazza, calling him irresponsible along with a few other names. Bazza had then done the right thing (as far as he was concerned) and grabbed the snake and put it in the pillowcase. Presumably, the publican called the wildlife rescue service for the safe relocation of the snake. As they walk past Mike’s car he hears:
Patron: “Well I got the snake for you. How about a free beer!”
Publican: “A free beer? No way. You’re bloody-well irresponsible!”
The take-away from this story for you is that staff members have personal biases that stem from their VEG (values, environment and genes) resulting in different perceptions of risk. Obviously Bazza thought nothing of dealing with a python while the publican knew that people in the beer garden would more than likely freak out if they saw a snake. Even if the snake was relatively harmless (pythons are non-venomous and very rarely attack humans as they swallow their prey whole).
Given we all have different perceptions of risk, as leaders in organisations it is an imperative that staff know your tolerances for risk taking.
If you want to know more about my thoughts on risk appetite download my whitepaper or, better still, buy my book and gain access to my latest risk appetite templates.
Stay safe!
PS. I’m thrilled to say my book Risky Business hit the #1 Amazon Best Seller list recently in the Risk Management Category. If you have read it and think it’s worthy of a review, I would greatly appreciate your time in leaving one. You would make this risk nerd very, very happy. You can email it through to me HERE.