Risks are mandatory to successful businesses.
Risks are threats and opportunities, and you try to manage them as well as possible regarding your own risk appetite and risk capability (what your business can take at the most) ; with, always and always, risk appetite inferior or equal to risk capability.
In sport, risks are often seen as those taken on the field on a play call, a pass, a slam dunk or a three points attempt at the buzzer. You also speak of risks when drafting that player, or signing one in free agancy ; or trading for one. Everyone has still in mind the ransom for Ricky William, or the Herschel Walker deal. On a positive side you can look at the Tom Brady risk taken years ago by NE.
It is interesting to see how a GM look to manage and tackle risks and opportunities in a business. In the wake of the Big Ben trade, we asked GM Ratajczak if he can share some of his thoughts and process abour risk management.
"Firstly, you must be compliant to requisites asked by acts and norms, whether they are professionals or State or Federals. Then you have your own mind on the matter; not everyone has a keen eye and practise about risks and opportunities. And the first thing is how you scope your business. In my case, discretionary offices are out of my scope. Those are offices such as marketing, corporate finance to name some. I do only in terms of football side of business, and that include cap situation for the financial part, football budgets and all you see on any given Sunday.
Once you have shaped your business you have three type of risks and opportunities:
- strategic, who are long term and issued from the global strategy you have
- Programme/tactic : mid-term, like within a 3/5 year plan ; or those within a programme you launch to modify your business. Those are issued from what you do and of course from the strategy
- Operational: the day to day risks and opportunities as you run your business
In my case I am borderline with strategic and tactic, as you know in SFL we?re GM under success conditions on roughly a 4 years span (if successful). As so you act and think differently than another one who knows he?s going to be here longer. That?s normal, but I take pride in thinking that I am not only working for my ass here and job safety, but also for the Franchise long term.
So, as to assess risks and opportunities, the most useful tool is the risk matrix. It is important to include it a risk process which is akin to plan-act-check-do, and is assess, evaluate, plan responses and do/check. Some just make a matrix and live with that; but the most important is the process more than the tool. Without a process, your tool can be off way of your needs.
I also like to complete the thinking with a quick and simple too called Risk calculator developed by Robert Simons in Harvard Business review. That?s a quick start in risk and can help to think thing through on short notice.
That?s within the process shortly described before that we went through to analyze the Big Ben trade. What impact does it have to have no first round picks ? Going with Big Ben covers a risk to our strategy, which is going to the playoffs ; but doesn?t it raise another one we didn?t have before ?
We analyzed that we needed a different QB than Sorgi to have the push, but who really? To cover this risks you take account another parameters like which kind of QB you need : a more confirmed Rivers, but mobile as a statue, or less regarded but a more flexible profile like Big Ben ? As so, you can see that a risk matrix can open another one for a specific risk with risks profile. And this is just risks : you have to look also at the opportunities it creates : players in FA will see the team better than with just Sorgi ; they see we have no blind commitment and we?re here to be competitive. That?s a demanding task to work on risks and opportunities, but that?s rewarding. It also calls for consensus within the staff and organization. I don?t know how to manage without that approach?.
GM Ratajczak is quite the man to talk about risks. He feels is the working piece within organization because as he said it helps create consensus and channels behaviors and decisions that can lead to loss.
Regarding the Broncos, it is not possible as of now to say if the Big Ben move is an issue to happen or the reaping of a great opportunity taken. But we do know now why the GM feels confident about the move.
Note :For those interested in the risk calculator, here is the link of the article :
Risk calculator