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. And the inter-connectedness of our risks within and external to our organisation must be considered as we identify and manage our risks. The complexity of our risk management practices should not be under-estimated.

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.

 

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 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 activity must be aligned to support or enable this one key performance indicator.

 

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 matter. Don’t under-estimate 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.

As Ukrainian President Volodymyr Zelensky appealed to Russian soldiers, “we will treat you the way people are supposed to be treated.”

Therefore, treat people with respect and dignity.

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. 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 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 of decisions made, good and bad.

 

What we know – If Russia doesn’t achieve remarkable success quickly, it would leave the door open for Ukrainian troops to start large-scale 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 has split into two axes. This is a serious risk to Russian forces as the 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 add value to the organisation.

 

What we know – Russia is 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.

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.

Lesson – Risk officers must be bold and courageous and tell the truth. 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.

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 people 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 avoid challenges and be the blockers.

 

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.

 

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.

Professional bio

As a Chartered Accountant with over 25 years of international risk management and corporate governance experience in the private, not-for-profit, and public sectors, Patrick helps individuals and organizations make better decisions to achieve better results as a corporate and personal trainer and coach at Practicalrisktraining.com.

He is also the co-founder of Skillsand.org, an organisation dedicated to helping people acquire in-demand job skills and preparing them for the future of work. The goal is to create a convenient learning experience that’s as easy as making any other purchase on Amazon.

Patrick has authored several eBooks including Strategic Risk Management Reimagined: How to Improve Performance and Strategy Execution.