As we applied our risk management plans over the years and saw our risk mitigation plans begin to bear fruit in relation to the key risks identified, experience taught us to expect the unexpected as in all businesses there are risks, often unidentified, over which management has little or no control. These include natural disasters (tsunamis, volcanos and diseases) and political risks (state actions, riots etc). For instance, would a business compiling a risk management plan in 2015 have seen Brexit as a likely threat even though Grexit was a distinct possibility at the time? Also, in 2009 would an airline operating in the UK or, for that matter, anywhere in the world have realised that an ash cloud pouring out of a remote Icelandic volcano would cause European airspace to be closed between 15 and 23 April 2010 at a cost of $200M to the industry? Further, would a business in the last quarter of 2019 have on its radar the possibility of a pandemic that would cause many businesses to cease all or the majority of their operations for a period of months? These were the types of issues that caused the business with which I was involved to build in a substantial contingency fund to its annual business plan and to consider catastrophe insurance. We also learned to value excellent broking and risk management advice from an external source that came to thoroughly understand our business model.
However, when all is said and done, a prudent and robust approach to risk mitigation must be carefully balanced with a degree of flexibility so that the entrepreneurial spirit is not inhibited. We must not kill the goose that lays the golden egg!