Sunday, June 24, 2007

More about Risk Management

I commented that risk management was a well established discipline. Almost immediately, I was asked to explain myself.

Here then are my thoughts on risk management and how practitioners can implement social media campaigns and incorporate risk management and planning for the unknown in an era when we don't even really know what traditional newspapers, radio and television will look like in five years time, a planning time scale for many organisations.

Risk management


Risk Management is a well established discipline with an excellent literature.The Institute of Risk Management has an excellent guide that will be helpful to PR professionals working in both on and offline practice.

The basics of risk management are relatively simple to grasp. In most PR work there are risks. To manage risks we need to identify them. This can be done by an individual, a focus group or management team or can be established from research.

Risk can be examined from many sources. Examples are:

Legislative change
local
regional
national
European
Global
regulation

Corporate change of direction
Change in requirement
Change in objectives
Change of output, outtake, outcome requirement

Change in publics/stakeholders
Added publics
Removed publics
Publics change
Platform/channel for communication
Change/changing
New
Fast/slow adoption
Reach
Reliability
Perceptions of

Implementation impact
Technology change
Content not available
New/changed opportunity

Unexpected change in team
Managment team
Technical team
Operations team

Competitor action
Merger/acquisition,
Competitors me-too actions

Management Directive
Corporate aims and objectives
Budget
Delivery schedule
Monitor, measurement, evaluation requirement
other
Corporate re-organisation

At board level
Departmental re-organisation
Merger/acquisition

Problem not anticipated
Reputation/ethical issue
Corporate, brand, personnel crisis
Server down/overload
System attack/bug
Change in available resources
Vendor availability


Regular checking of these elements to identify potential or actual risks is helpful, if not essential.


Having described such risks, the practitioner (evaluation team) will asses each element in terms of likelihood of occurrence and impact (perhaps on a scale of five for each) typically using aids to decision making. The next part of the process is to create a mitigation (or contingency) plan, process or protocol to reduce either of both risk of likelihood or impact. Then a new assessment is made of the likelihood or impact to see if the proposed programme for mitigation has had an effect that makes the risk acceptable within the campaign.


An example of risk management might be a risk of porosity where employees use blogs. The risk is likely and could have significant impact. A practitioner might propose that all employees are given some company guidelines (an example is IBM which has an excellent policy statement). such a plan will help reduce both likelihood and impact.

Using such a process through each part of the planning process reduces risk to a manageable level and also helps to make precise projections of expected outcomes.

Of course, for each risk there is an opportunity. By applying the same technique but looking for opportunities and means to optimise such opportunities, the practitioner can enhance the effectiveness of any approach to a campaign.


Uncertainty management

In planning against uncertainty the rules are simple. We consider variation, foreseen uncertainty, unforeseen uncertainty and chaos.


Variation


All plans have expected outcomes, financial budgets and timescales. These are often identified using aids for project planning.
Monitoring such plans will identify where plans are going awry. Often such occurrences are small. These are 'variations' to the plan. Good monitoring will give teams notice that remedial action has to take place and contingency can be built into the plan. An example might be a contingency sum in a budget and some flexibility in delivery time built in.

Foreseen uncertainties

There are some variations that are identifiable and understood that the team cannot be sure will occur or when an event it will occur. To mitigate foreseen uncertainties, the plan will need to include the capability to identify the event and a capability to deploy a pre-planned contingency programme. An example might be unscheduled maintenance that is running the campaign blog. A real example for all practitioners in online public relations is planning for the sure-fire certainty that in the next few months, channels for communication will change. Equally all our constituents will adjust the channels for communication to be able to cope with the time available to use their different channels - its called attention deficit. Every practitioner should be aware that for a range of reasons the organisations web site will, as some time, by flooded with requests. When that happens, there has to be a plan to keep the server responding and offering the information the online constituency needs and the web site open for business as usual. This is a PR problem. It is not an IT department problem. Risk analysis is critical in identifying and mitigating these events. Practicing for such events has to be included in any plan. Who does what, when and how and if they are not available or facilities are down should be part of such a plan.

Unforeseen Uncertainty

This kind of event can not be identified during project planning. There is no Plan B.

The team will be unaware of the event’s possibility or consider it so unlikely that there is no in-built contingency plan.
“Unknown unknowns,” or “unk-unks,” as they are sometimes called, make people nervous because existing decision
tools are not available. Unforeseen uncertainty is not always caused by spectacular events or issues. They can arise from the unanticipated interaction of many events, each of which might, in principle, be foreseeable.

The first thing that we have to do is to make the organisation aware that unforeseen events do happen and they have to be, and can be, managed. Contingency planning has to evolve as the project progresses.

Here are the key elements for reducing the impact of the unforeseen:

* Teams must go beyond mere crisis management and continually scan for emerging influences — either threats or opportunities. Practitioners should be scanning the horizon more than three months out to identify potential problems while they can still do something about them. Monitoring the destinations of users online is a first consideration. In 2006, the move of the online community away from traditional web sites to sites driven by user generated content was unforseen with unknown additional web sites struggled to attract visitors.
* Risk analysis must be an ongoing activity with no potential hazard excluded because it seemed wacky at the time. With awareness of the growth of Twitter (www.twitter.com), corporate porosity became even more significant.
* With unforeseeable uncertainty, a lot of time and effort must go into managing relationships with key publics, often getting them to accept unplanned changes. Knowing who and how to contact key publics is important. Good old fashioned public relations to maintain good and effective relationships count when the unforeseen happens.
* Top-management support, negotiation techniques, team-building exercises and the practitioner's leadership can help resolve conflicting interests.
* Trust is a core element in managing the unforeseen which means value systems and value system analysis is critical (ibid)
* Managing variance and planning for managing foreseen uncertainty assist managing the unknown because contingency planning will be part of the organisation's culture.

The unforeseen can be managed.
The US Institute of crisis management offers some insights into where to look for unforeseen uncertainty, listing the most common on its web site (http://www.crisisexperts.com)

One of Catastrophes
Casualty Accidents
Environmental
Class Action Lawsuits
Consumer Activism
Defects & Recalls
Discrimination
Executive Dismissal
Financial Damages
Hostile Takeover
Labour Disputes
Mismanagement
Sexual Harassment
Whistle Blowers
White Collar Crime
Workplace Violence

If ever there was a list for identifying how confidence and reputation could be destroyed by online influences, this is it! It offers a start point for scanning both internal and external events that could escalate into unforeseen uncertainty.

So there it is.... we can, and have to plan for risk and uncertainty.

There is a counter argument:

Clay Shirky puts this view for ward: "when you explore really new ideas, it’s pretty much impossible to tell in advances the successes from the failures. The business world today is geared towards “optimizing” the innovation processes in order to reduce the likelihood of failure. That’s a significant disadvantage when compared with the open-source ecosystem, which “doesn’t have to care” and “can try out everything” because “the cost of failure is carried by the individuals at the edges of the network, while the value of the successes magnifies and adds value to the whole network”. “Ecosystems such as open-source get failure for free, and that produces some inevitable unexpected big successes - the Linux operating system - that nobody could have predicted but end up changing the world”.

Which leads to this comment from JP Rangaswami on this blog post: "If you disaggregate the cost of failure it will drop. If you reduce the cost of failure then you increase the capacity to innovate. If the innovation is carried out by individuals at the edge then those costs drop as well. As all these costs drop there is a natural speeding-up. A lovely virtuous circle with the right feedback loops."

So there is a case for experimentation and 'pushing the envelope' for the bold PR person if the concept (strategy) can accommodate involvement by the community to gain a competitive advantage.

So how does this fit into online public relations campaign planning?