A CEO’s take on company Risk Measurement

A word from the CEO of Sancert on Risk Measurement

Leon Swart, CEO and founder of Sancert has been in the management industry for over 30 years as a business owner, offering products and services for ISO quality and risk management. 

I am always fascinated at how many large and small companies bog themselves down with flavour of the day business philosophy, guru idolism, quality and risk measurement tools followed by a string of meetings to discuss and plan. Surely all the energy, time, cost and outsourced fees for all the above should be considered a risk in itself?

If a company measures its wall to wall cost so it can determine an overall running cost per hour, then consider the time spent on all the above items- the investment will definitely astound you! Then consider that the investment is direct profit loss, meaning (in simple terms) if that cost is R50 000 and your profit margins are 25%, the next R200 000 of business just covered those internal costs. Plus, you have lost all the time spent making that profit.

I can’t tell you how many times I have seen top management in EXCO meetings debating a R20 000 expenditure for half an hour. Six top executives at a running cost to company of easily R2000 per half an hour is R12 000, and then of course that time is lost and cannot be spent on something else, so in essence R24 000 has been spent on a R20 000 decision.

So my argument is very simply put, but my point is; we spend way too much time and resources nowadays without actually understanding the cost. The real basics of a company is simply to make a profit.

That should be the only risk measured.

Tip of the Month- To Guide Your Company’s Future, Look to Its Past

Each company has its own DNA: a unique strategy and culture that sets it apart from competitors.

To guide an organization’s growth, you need to understand its nature. Start by looking at its past. Dig around in the company archives. Talk to early employees to find out what the organization used to be like and what shaped its beginning. Read the corporate history, if you’ve got one. Look at the original vision and values of the founders. How did they see the world? What problem were they out to solve? How did they believe the business was creating value?

Map what you learn to the company’s current business. Where is there alignment? Where isn’t there? The goal of this exercise isn’t just to increase your understanding of the company; it’s to think about how the company can create value in new ways while staying true to its origins.

Adapted from “How to Discover Your Company’s DNA,” by Mark Bonchek. harvardbusiness.org.

Tip of the Month- Be Water Wise!

Be educated about the importance of using less water.

  • Creating a workplace culture that focuses and takes pride in efficiency can be a very beneficial component of a water conservation plan. Increased awareness will ensure more staff members are monitoring water use.

Things that can be done:

    • Give recognition to those who initiate water-efficiency procedures and processes.
    • Make resource conservation part of performance reviews, especially for line managers.