Risk management lessons from the Ukraine war
Risk professionals can learn from Russia’s unprovoked war on Ukraine.
The ripple effect of the war on every individual can be felt across the globe. One such effect is the increase in fuel and food prices. This war is a stark reminder that we are living in an interconnected world.
Likewise, the inter-connectedness of our risks within and external to our organisation must be considered as we identify and manage our risks and opportunities. The complexity of our risk management practices should not be underestimated or over-engineered.
Here are some risk management lessons we can learn.
What we know – Western officials had estimated in February that Kyiv is “likely within the space of about 72 hours to fall”, but that did not occur.
Lesson – It is always hard to assess the likelihood of a future event given the limited information.
There is a balance between completeness and timeliness – that is, either wait until we have all the information to decide or make a timely decision without all the information.
‘Just do it’ may be the preferred option when reputation and expectations are at stake. And continuously pivot as more information comes to light using Agile mindset.
What we know – On February 28, the head of Estonia’s foreign intelligence service said that he didn’t believe Putin could “keep up an intensive war for more than two months” and that ultimately “Russia will not win this war.”
Lesson – Organisations need to have realistic strategies and outcomes that they want to achieve. Unclear or over-ambitious organisational strategies are common. So, too will be organisational failures.
Without clear strategies and objectives, risks and opportunities cannot be identified and managed effectively.
What we know – The Russian invasion of Ukraine has been marked by indiscriminate attacks on civilian areas and strikes on protected objects such as hospitals.
Lesson – Many organisations adopt the spray and pray approach to their strategy development and implementation. They hope that at least one if not more of their strategies can bring about the outcome they have planned for. Such an approach is resource-intensive and non-value-adding, especially if the outcome does not materialise.
Having one single focus or key strategy is preferred especially when the organisation is large and complex. Getting everyone on the same page gets harder when the organisation is large or complex.
For an airline operator, the key strategy should be on-time service. Every business activity must be aligned to support or enable this one key performance indicator.
Amazon’s one key focus is on delighting its customers. When customers are delighted and happy, they make more purchases. Customer satisfaction leads to increase sales and profitability.
Finding this one key driver of organisational success or strategy can be challenging for many organisations.
What we know – In early March, it was reported that at least 171 pieces of abandoned Russian equipment and 464 pieces of captured equipment, ranging from tanks, armoured personnel carriers, artillery, and even sophisticated air defence systems. All this material was once manned by Russian operators who have either been taken as prisoners of war or simply deserted and wandered into the Ukrainian countryside.
Lesson – People do matter. Don’t underestimate or neglect your people.
Organisations can have the best equipment and hardware, but the game is over if there are no capable people to manage or operate them.
Taking care of your people is important. Treat people with respect and dignity. Treat them as how you would like them to treat you.
As Ukrainian President Volodymyr Zelensky appealed to Russian soldiers, “we will treat you the way people are supposed to be treated.”
Human-centred leadership and management will lead to increased employee experience and positive culture and performance.
What we know – Massive fatigue of Russian units was one key reason for the sluggish pace of their movement.
Lessons – Don’t overstretch and overwork your workforce just to get things done. Overworked employees are unproductive employees.
They will leave you when the opportunity arises. Now more than ever, it is easy to get another job elsewhere.
What we know – A third of the Russian units have been replaced in March, but incoming units have even worse quality. These incoming units don’t have a good impact on combat capability.
Lesson – If organisations think they can just buy or acquire external talent (i.e., hire new people) rather than building them up internally through upskilling and development, the new incoming external hire may not work out as expected.
What we know – Russia has several options as to how to try to regain the momentum to take Kyiv. First, they could announce a mobilisation in Russia and call-in reserve troops. Secondly, send Syrian pro-Assad soldiers and militiamen to Ukraine.
Lesson – Not all options are created equal. While weighing up options is important, indecision or procrastination can equally be bad.
Just deciding and learning from it is the best approach. There will be consequences for decisions made, good and bad, or for indecisions.
What we know – Russia did not achieve remarkable success quickly. It left the door open for Ukrainian troops to start counter-offensives.
Lesson – The business operating environment is moving faster than ever before. The speed by which decisions must be made and actions to be taken have significantly increased, enabled by significant advances in technology.
Time is of the essence. Wasted time is wasted opportunity.
What we know – The southern line of Russia’s offensive was split into two axes. This was a serious risk to Russian forces as their supply lines have been weakened.
Lesson – Whatever organisational strategy is adopted it must be supported by the allocation of sufficient resources and funding. There is no focus when resources are spread too thinly.
So often organisational initiatives are unfunded or poorly resourced because of poor strategy formulation and execution, or they are ‘pet projects’ that do not add value to the organisation.
What we know – Russia was attempting to bite off more than it can chew by opening new fronts when it doesn’t have enough troops to fight the ones it currently has while also suffering from very poor logistics.
Lesson – Develop the right supports for your front lines or value-adding activities. Support functions like HR, finance, and even risk must be business-focused and do things that will generate value for the business. Their actions must be aligned with organisational strategy.
They should not be gatekeepers or naysays. Instead, they should help the business to make things work and put in place cost-effective controls and mitigations to increase the likelihood and extent of organisational success by taking calculated risks and seeking out opportunities.
Having a can-do, making-things-happen approach is important from a value-creation perspective.
What we know – Putin was told he had something like 10,000 missiles. But in fact, he had only 1,000.
The White House said that “We believe that Putin is being misinformed by his advisers about how badly the Russian military is performing, and how the Russian economy is being crippled by sanctions because his senior advisers are too afraid to tell him the truth.”
Lesson – Risk officers must be bold and courageous and tell the truth in the appropriate manner. Management may not like to hear what you say, but sugar-coating the truth, or telling lies, will only give a false sense of security and create mistrust and lack of transparency.
Trust is the true currency of business. If people don’t trust you, they won’t feel like you have their best interest in mind or that you will deliver on your promises. They won’t trust you to solve their problems.
And if customers or stakeholders don’t trust you, they won’t want to buy from you.
As trusted advisors, risk officers must build trust, communicate the truth, and work with the business to overcome challenges, not to avoid challenges and be the blockers.
Unfortunately, many leaders and managers surround themselves with ‘yes-people’ or people with the same personality or work styles. There will be no discussion or truth-telling because these ‘yes-people’ will only tell things that their leader or manager would want to hear by managing up.
Surrounding yourself with people with diverse and different views and experiences will enrich your decision making. It can shed a light on your blind spots and lack of knowledge or information.
No one can possibly know everything. Hence, we need to rely on others to tell us things that we do not know.
What we know – Ukraine’s military defence agency intercepted a Russian security agency officer calling in the death of Maj. Gen. Vitaly Gerasimov.
Lesson – Develop systems and processes that can gather the right ‘intelligence’, or information, to increase your organisational success.
Having the appropriate ears and eyes over the pulse of your business and operating environment will be vital for the organisation’s survival and sustainability.
When your intelligence systems are compromised, you may not achieve your objectives.
What we know – The Ukrainians have the motivation and desire to defend their country and their freedom from Russia, which has contributed to their fighting spirit.
Lesson – Knowing and aligning the WHYs of the organisation’s existence and of the individuals working in that organisation are critical success factors for any organisation.
The WHY drives the WHAT and HOW. It motivates people to go beyond their job scope.
Unfortunately, not many organisations can fully articulate their WHY.
What we know – Putin had placed the head and deputy head of an intelligence service under house arrest.
Lesson – Rather than taking responsibility for what goes wrong, it’s so easy and tempting for a manager to blame his or her employees when things go wrong.
If employees don’t perform the way you wanted them to, that’s your leadership mistake. Leaders are paid highly to make decisions and be accountable for the outcome of their decisions – good and bad.