Sharks, Pirates, Pareto and Risk

How Sharks, Pirates and Pareto can help to manage risk in the face of change

Your organization is in the midst of change. A merger? Acquisition? Downturn? Disruption?

Yet, you are someone who makes it happen. You are not someone who stands idly by to let change roll on top of you.

Here is a risk planning activity, that also acts as a pressure relief valve for your team and organization. It is based on the risk planning my team and I underwent before we crossed the Atlantic Ocean, without support vessels, in a tiny, scientific rowboat.

Countless uncertainties exist in our modern work environment. The coronavirus is just a recent example. Terrorism, elections, hurricanes, technology, disruption, labour, management, and more will push us off course.

So what can we do?

The first step is to write down all of the risks and the fears that we have of the future.

For us on the ocean row, it looked something like this:

 

Risks associated with ocean rowing. Emergency life raft training in the background.

You can do this with your team with sticky notes on a wall, or on a live computer screen that everyone can see. Be creative.  The goal of this is to get all the concerns for the future out and in the open

Two important questions

Next, we can mitigate our risk effectively by asking two questions:

  1. How probable is it that a risk will occur?
  2. What will the impact be of the risk if it comes to fruition?

Once we have identified the probability and impact of a given risk, we are then able to map this out on two axes to gain more insight into how a risk will affect us.

 

Map your risks according to probability vs impact

 

For our ocean row it looked a little something like this:

 

Qualified risks of ocean rowing

 

Next, we need to spend some time qualifying for the risks.  First, we will identify our ”sharks” and our “pirates”, to let out the pressurized steam of anticipation and fear.  Finally, we will identify our “pareto”, which will show us which problems need the most time, resources and attention.

What is a shark?

A shark is something that is highly likely to occur and holds significant emotional weights of fear, concern and anxiety. Yet, once identified, a shark will have a relatively low impact on the outcome of your future.

For example, in the middle of the ocean, when you see a shark from your rowboat, how do you mitigate risk?  You stay in your boat. You do NOT go for a swim. Risk mitigated.

 

What are the sharks in your risk analysis?

What is a pirate?

A pirate is something that has a low likelihood of occurring but also holds significant emotional weight.  Fear, concern and anxiety are released when your analysis differentiates between probability and possibility.  Anything is possible, but fewer outcomes are probable.

For example, when rowing across the ocean, is it possible that you will see pirates?  Yes.  Probable? No. Especially if you contact the regional authorities to ask if pirates are in the area.  Also, if you were to do your research (which our ocean rowing crew did), you would realize that pirates want to steal valuable cargo like oil, minerals or luxury cargo, not four dirtbags in a rowboat.

 

What are the pirates in your risk analysis?

Pareto Logic

Finally, when you have let the steam out of your risky future by identifying, qualifying and articulating your sharks and pirates, then you can start moving through the items on your graph that need the most attention.

Most of us have been exposed to the Pareto Principle that states “Twenty percent of our efforts will bring eighty percent of our results.”

 

What risks deliver the biggest bang for the buck?

 

At the end of this exercise, you should be able to guide your team to release unnecessary fears and focus on the items that are most important.

 

Do you know the sharks, pirates and pareto in your risk analysis?

Other Popular Articles on KBS Blog:

–––––

No alt text provided for this image

Adam Kreek is on a mission to positively impact organizational cultures and leaders who make things happen.

Kreek is an Executive Business Coach who lives in the Pacific Northwest. He is an Olympic Gold Medalist, a storied adventurer and a father.

He authored the bestselling business book, The Responsibility Ethic: 12 Strategies Exceptional People Use to Do the Work and Make Success Happen. 

Learn more about Kreek’s coaching here.

Learn more about Kreek’s live event service here.