It has been a difficult couple of years for Australian businesses.
Be it the pandemic, natural disasters, inflation, or rising interest rates, no organisation has been spared the need to manage unprecedented challenges.
In situations like these, it’s natural for executives and board members to become increasingly risk averse. The potential for things to go wrong or get worse plays on their mind, and they fall into a pattern of risk avoidance over seeking new opportunities.
For healthcare organisations, rapid changes in their environment have left many in the sector a little shaken. For example, the speedy shift to new technologies did not come easily to all – draining resources and already-burdened staff to get technology rollouts over the line.
Having endured so much, it may seem impossible to emerge from the trenches and start to look for silver linings. However, this is the opportune time to do just that. While maintaining a focus on risk has been practical, sustaining this focus will eventually lead to missed opportunities.
What is your risk appetite?
COVID has given executives and board members a clean state from which to evaluate their operations – including their vision and how they are working to realise it in the short, mid, and long term.
Re-aligning your organisation with its vision is especially important and will help stakeholders re-assess their risk appetite. This is the level of risk you’re willing to accept, and it has a direct impact on your inclination towards or away from innovation.
Your risk appetite also dictates the level of resources that are directed towards risk management. A low-risk appetite requires investment in more controls as you attempt to manage certain risks set out in your risk register. On the flip side, a higher risk appetite may require lesser investment in additional controls, which frees up resources to explore new ideas and projects.
Different business areas will have different risk appetites. For example, your appetite for cybersecurity risks is likely to be low, so you are willing to spend on solutions that keep your networks and data safe.
While you may have developed a risk register and appetite statements before or during COVID, now is the time to review them with a slightly different mindset. Try to move beyond the day-to-day management of risk, and take a helicopter view of your business. Consider what can be learned from recent events, and how these could be applied to grow or future-proofing the business.
For example, is there an opportunity to adapt business processes to maximise the use of new technologies and improve productivity and ROI? Or when it comes to your workforce, is there an opportunity to broaden how you think about recruitment to entice new staff in the midst of a skills shortage?
Data is another area that’s often ripe with opportunity. For instance, can you find ways to leverage available data for analytics (including predictive modelling) to improve patient care, customer, member, or employee experiences, workforce utilisation, or business outcomes?
Balancing risk and opportunity
Fortunately, we are talking to many boards right now who are highly engaged in discussions surrounding new opportunities.
They understand the need to challenge mindsets that set in during the pandemic and seek out ways to innovate – which ultimately sends a positive message to their people about the future of the organisation.
Of course, you don’t want to ignore risk altogether. The key is to find the perfect balance between risk and opportunity.
To do this, you could:
- Explore: Where are our opportunities? Where can we gain efficiencies? What can we do better?
- Conduct: Structured workshops to develop or update risk appetite statements.
- Stress test: Risk registers against risk appetite statements.
- Communicate: What are our short, mid, and long-term goals? What do risks and opportunities mean for management?
If you need support to develop risk appetite statements, update risk registers, or stress tests either, we can help.
Our specialist Healthcare and Community team have assisted many organisations in the sector through our risk advisory services. We can also facilitate robust discussions with boards or committees to identify where the ideal balance of risk and opportunities lie, so you can begin to explore what’s next for your healthcare organisation.
For more information
For a confidential discussion, please contact our Healthcare and Community team at (03) 9286 8273 or reach out to your local RSM office.