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"Often the real danger of conventional risk logs is they can create the illusion of control. But this doesn't have to be the case."


Justin Hughes, PA supply chain expert 

Why a lottery win could be bad news for you

Justin Hughes

Supply Management  

11 April 2013


Some years ago, I was working for an organisation that had just won an enormous project. The project was highly complicated, hugely important strategically and required a large amount of skilled workers to deliver. As a member of the risk committee, I spent a great deal of time looking at potential issues, monitoring these, developing mitigating actions and generally trying to make sure everything stayed on track.

Then, one day, someone raised a very curious risk to the committee. A significant number of the team had entered a lottery syndicate and the risk that was presented was “what happens if they win the jackpot?”.

In the space of 30 seconds on a Saturday night, 25 key members of the delivery team might suddenly find themselves with no need to come to work on Monday. And, if so, they could resign with immediate effect. As a member of the risk committee asked: “What would you do? Would you do anything at all?”.

The chances of winning the lottery as an individual are around 14 million to one, which in most cases would represent a small enough risk to be ignored. But the impact of 25 key team members not turning up for work on a Monday morning? It would be potentially catastrophic.

As anyone involved in risk management knows, the assessment of risk lies in the ratio between the probability of an event occurring and the impact if it does occur. But this is only as good as the identification of those risks in the first place. I’m working on some research at the moment that asks how often the risks that have most affected companies were actually on their risk registers in the first place, and I’m sure the results will be fascinating.

Often the real danger of conventional risk logs is they can create the illusion of control. But this doesn’t have to be the case. Using a robust, methodical approach to understanding both what risks you know about and where there is an absence of risks, you can start to regain that control.

In case you’re wondering, the mitigating action for the lottery syndicate risk was to join the syndicate yourself!

Justin Hughes is a supply chain expert at PA Consulting Group

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