10.1 RISK MANAGEMENT
Qualitative Risk Analysis
Client Account
Work, Service, People & Product Contracts
Sales & Marketing
Essential Module Cross Reference
TOTAL CHECKS & TIPS: 126
REVEALED HERE: 27
ASPIRE manages two levels of business risk information:
Level 1
the overall Client Account
Sales & Marketing (S&M) activities performed as part of the Account Management & Development process
(Account Manager responsible for both)
Level 2
individual Work, Service, People or Product (WSPP) Contracts
individual S&M Initiatives, Opportunities & Bids/Proposals
(Level 2 risk is managed by the person responsible for the WSPP contract or specific S&M activity and although both these are outside the Account Management process, their Risk Management results are fed through to the Account Manager on an agreed frequency)
Risk Management is a process which enables you to identify, assess, classify, action, monitor and either eliminate, reduce, share or maintain (at its current level) any identified risk.
So, in Risk Management 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
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 at the overall Client Account, S&M activity or WSPP 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
So, as Qualitative Risk Analysis is the most practical form of Risk Management for Client Account Management & Development, it is used throughout this module.
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 will 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 your Company's Preventative Risk Register [PRR]) are searched for each time there is a new Client Account, WSPP contract or S&M activity
New/Reactive - new risks which occur unexpectedly and are added to the PRR as part of the commitment to continuous improvement.
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 need to keep a very careful eye on throughout.
There will always be risk so just accept it!
A sample of checks and tips is given below and a further 99 are provided when the module is purchased.
Qualitative Risk
For Level 1 (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 the Level 1 risks and sub risks, each will be classified as follows: green = low risk amber = medium risk red = high risk
Reducing just one of the two main aspects of risk (likelihood & severity of impact) may be enough to bring the risk to an acceptable level (residual risk/risk tolerance).
17 more available
Client Account
Level 1 (always Account Manager)
The Account Manager will assess the degree of risk in various key areas for the Account overall, allocating 'green, amber or red alerts' as appropriate. However, the Account Manager will inevitably 'dip into Level 2 areas' as he/she feels appropriate and review risks accordingly from the position as they see it.
The key Level 1 areas are:
Supplier
Client complaints
Conflicts with Mission Statement, Strategy, Goals & Targets
People resourcing
Exit Plan
28 more available
Client
Business performance/stability
Reputation/Market Standing
Management effectiveness
Change Management/Control
11 more available
Supplementary
As significant issues often occur within the Supplier's own organisation and are invariably overlooked when the overall risks to a Client Account are being assessed, the following areas 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?
Also, the 'threats' and 'weaknesses' identified in the most recent SWOT Analysis will be a key input to the Risk Management process for Level 1.
3 more available
Work, Service, People & Product Contracts (WSPP)
Level 2 (not Account Manager)
A green, amber or red alert for each WSPP contract must be fed through to the Account Manager at the prescribed frequency regarding more than 20 items including:
Financial Performance & Forecasts
Timescales/Deadlines
Teamwork (internal & with Client)
Contractual Issues
20 more available
Sales & Marketing
Levels 1 & 2
Risk identification and assessment needs to begin at the very start of any S&M activity, reviewed on a regular basis and then a new cycle of risk management introduced if and when a Sales Order is won
Each Sales Proposition, Opportunity and Order won will carry its own individual risks which will in turn increase the overall risk to maintaining the Client Account up to the levels specified in the Targets, Goals, Strategy & Mission Statement
Even if a Sales Order is not won, there may have been serious risk regarding suitability, cost and professionalism which could have seriously damaged your Company's reputation.
Also, if there are existing Contracts in place, great care should be taken to ensure contractual consistency wherever possible regarding all terms and conditions but particularly key performance indicators, penalties, payment terms and warranties.
20 more available
Essential Module Cross Reference
As Risk Management is at the hub of Account Management & Development, all modules of ASPIRE’s benchmark best practice qualify as ‘inputs’. Therefore, any module can prompt ‘actions &/or updates’ for as long as the Client/Prospect Account remains active.
“ALTHOUGH OFTEN GENERATING SIGNIFICANT EXTRA REVENUE, CHANGE IS THE BIGGEST RISK OF ALL AND CAN DESTROY TIMESCALES, JEOPARDISE WORKING RELATIONSHIPS & EAT PROFITS”
ANOTHER 99 CHECKS & TIPS AVAILABLE
75% PRICE DISCOUNT FOR LIMITED PERIOD
‘ASPIRE’ (How To Manage Any Client) ™
Account Management & Development
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