Risks, what do you mean risks?
Every company has a strategy for plotting their way around the ‘potholes in the road’ ahead. This is called Risk Management and it is generally thought to be pretty important. When partners are working closely together any disruptions in their joint operation will be serious. The temptation to deal with risks on your own can damage the joint business so it is extremely important that the partners manage these together.
“Our partner tries to resolve problems locally and escalates very late because they view escalation as failure. Recently this caused chaos in our IT services. We would prefer them to be ‘upfront’ with us and let us know there is a problem early.”
Senior Programme Manager, Global Oil and Gas Company
The partners must think about the likely risks to their venture and review regularly, in particular those that might affect the business objectives and their long-term contribution to the partnership.
They should also look at the different ways the organisations usually operate, as these might become causes of costly friction and disruption. Additionally, a common problem is organisations decide to collaborate but traditional Customer/Supplier attitudes get in the way. Agreed joint processes might solve both these issues.
“The relationship can be best described as founded on the principles of an all you can eat buffet; where the other party believes it can visit the servery at any time of day and consume whatever it wants, all at zero cost and without consideration of the business pressures on my organisation.”
Director, Global Engineering Company
The bottom line is the partners must agree a joint risk management system including a Risk Register. They must be prepared to develop and implement mitigating plans and activities. It will be a key task of the Relationship Managers to supervise this critical function.
“We were losing $800m annually and in the end had to write off $7bn in charges. We didn’t see this coming because we thought it couldn’t fail.”
CEOs BT & AT&T