In the policy of virtually every organisation today, space is reserved for risk management. Risks are thereby continuously analysed and identified. This includes looking at how such a risk can be eliminated, but also what the consequences would be if a risk did materialise. Risk management allows companies to proactively manage their risks.
Recently, Visma | Onguard organised an online session regarding how important risk management is, particularly for finance departments in the business world. After all, the organization is exposed to a lot of risk when, for example, customers do not pay or processes are not properly organised. But the business world does not have a monopoly on risk management. In top sport, for example, it is important to leave as little as possible to chance. Because there are many similarities between financial departments and top-class sport in this area than you might initially think, I draw the parallel in this blog.
Be well prepared
Top athletes naturally prepare themselves well for a match to perform as well as possible, finance departments can do the same. There will always be factors you cannot influence, especially in top sport with, for example, the weather, opponents or illness. But it’s good to prepare in those areas where you can. Risk management allows you to get this right for your organisation’s finances.
You need the right tools
For a skating competition it is important that skaters have the best skates, the most aerodynamic suit and that the ice is just right. The equipment has to be good. This also applies to finance departments. You need a sustainable ERP system from which you can extract the right information to adequately assess risks. And possibilities to structure all the data you collect, so that you can extract useful insights from the data.
Draw up a game plan
A well-known concept in top sport is a competition plan. This lays down the plan of action and indicates everyone’s role in the plan. This makes it clear to everyone what course is being followed. It is also important to draw up a policy for risk management. In it, you can set up control and authorisation processes and record the agreements made within the team. Such a plan is extremely important, but it is also good to be flexible in exceptional circumstances, such as during the COVID-19 crisis.
Make use of data
To measure is to know. For example, smart sensors in cycling allow every pedal stroke to be measured, food to be precisely weighed and all kinds of data can be stored about the physical condition of an athlete. This data can be used to steer the athlete into the best physical condition for a competition. A great deal of data is also collected in financial processes. On the basis of this, risks to the cash flows can be properly assessed, even down to customer level. Data is therefore indispensable for good risk management. Add to this ‘continuous learning’. You have to keep developing, so it never stops.
And last but definitely not least, the mentality makes the difference. The big difference between an athlete and a top athlete is the mentality, the will to win and to put a lot, if not everything, aside for that. In business, it’s no different, the ‘tone at the top’ and how that translates into the organisation makes a big difference. Here lies the key, how do you translate the mentality of a winner and combine this with a controlled environment in which someone can actually make a difference?
The big difference
Are there only similarities? No, there are also differences. A big difference between top-level sports organisations and commercial organisations is the short-term vision versus the long-term vision when it comes to finances. Many top-level sports organisations are dependent on sponsors and the cash flow is not so easy to plan ahead. When a sponsor pulls out, it can have a big impact on the company. In commercial organisations, the impact is usually much smaller and finances are easier to plan in advance.
Risk management is therefore of great importance in all organisations. How is your organisation doing? Are you already on the level of Elise Christie or Primož Roglič? Or will you have to train a bit more?