‘Don’t ignore the warning signs’

The changing environment in which we work holds new challenges daily – and with 2012 looking like a very challenging year, risk should be top of the agenda, says operations director of Cargocare Freight Services, Sue Wood. When it comes to risk, forearmed is forewarned. “Most of us tend to react when things happen – by which time it’s no longer a risk but a hazard,” says Wood. The key is not to ignore the warning signs, she adds. “King III and corporate governance, the new Companies Act and the Consumer Protection Act are all about risk and how to protect against it.” In Wood’s view, you ignore them at your peril. Identifying the risk, taking mitigating action and turning it into an opportunity is the way to go, she says. And this is equally relevant when dealing with staff issues as it is in relation to potential logistics business risks. “Foreign agents (or other partners) going bust is not uncommon with all the high jinks in Europe,” says Wood. “And while a General Average claim from a ship fire may not happen very often – what do you do? “Then there’s the problem of Sars stopping a shipment for a new customer and taking three weeks to decide whether or not they’re going to allow the clearance or fine you. Either way the fine/storage end up exceeding the value of the shipment, the importer refuses to pay and abandons the shipment, and you’re left holding the baby “You have no relationship to fall back on, the insurance company wasn’t able to give you credit cover due to it being a new business, and suddenly the importer doesn’t answer your phone calls. A perfect example of a risk turned into a hazard at midnight, when you were sleeping.” Clearly there is no ‘onesize- fits-all type of solution’, says Wood, who suggests several interventions that can be put in place to mitigate risk.  Form a small risk committee of senior people that will give you the best ‘knowledge’ coverage of the business. Put together a risk statement about how you think you’d like to approach risk, but be clear that people understand the difference between risks and hazards. Then get them to think about possible risks in their own areas. It gets a little more tricky from here because someone has then got to do something, and do something consistently. The question is who should the someone be? Once you get past that step, risk management activity is the way forward, and this would involve assessing and identifying risk, and implementing solutions. Then continuing to do so.  Visit the Risk Doctor website for hints and tips on how to better manage your risk, or obtain other risk material from the internet which is plentiful.  Employ a risk manager, as many banks do, but that may not be viable unless you have a big budget, or appoint an existing manager to handle risk, in which case it will probably never come onto the agenda.  Buy risk software. There is some good stuff on the market, but make sure that someone champions the cause, and that you don’t just spend money on software that will never be populated with information. “Whichever method you decide, in today’s freight business you can’t afford to ignore risk in any area of the business.”