Back in April, I wrote about the topic of risk and shared a definition from Michael Hayden, the retired United States Air Force four-star general, former Director of the National Security Agency, and former Director of the Central Intelligence Agency—a man who knows something about risk.
He described it like this: Risk = Threat x Vulnerability x Consequence.
Many of you know the 360 Live Media 6 Rs: Reach, Retention, Relevance, Reputation, Revenue and ROI. We believe these are the objectives that every association and business executive must focus on to be successful.
We are now adding a 7th R—Risk—to better inform how we must all balance the achievement of the other 6 Rs.
Here’s how I see it working in theory:
Reach x Relevance = (Retention + Reputation + Revenue + ROI) ^ Risk
To me, this equation means that if you attract the right people and your organization is uniquely relevant, you will achieve all of the other Rs. In other words, your organization’s member retention rate, reputation in the industry, top-line revenue and overall ROI are achieved by being individually relevant to the largest percentage of your desirable audience.
Now, let’s consider the impact of risk. If the external threats and internal vulnerabilities are known, than the consequence of the risks can be measured by how much they impact the other 6 Rs. And the results may surprise you. For example, what’s the risk of a competing event on the reach or retention of the audience at your annual meeting? Or the risk of not having enough employees under 35 in positions of authority to influence your member value proposition and messaging strategies? Are you getting exponentially better or worse as a result?
As you begin to evaluate your strategic plan for 2019, now is a good time to assess the Risk on each of the other 6 Rs and determine how to best anticipate the threats and vulnerabilities so you can deliver positive consequences for your stakeholders.
What’s the greatest risk you face over the next 12 months, and what might be the consequence?