En Voyage_Issue#11_Flickbook

UP TO YOUR NECK IN RISK
MITIGATION? LEARN FROM
SOMEONE SUBMERGED IN IT
Business
BY WAYNE ATKINSON, GROUP PARTNER, COLLAS CRILL.
I’m conscious you’re probably reading this on a
plane to pass the time and don’t really want to hear
about compliance. With that in mind I want to tell
you about the most impressive speech I ever saw.
It was given by a man called Jarrod Jablonksi who
Wikipedia describes as a “record-setting cave diver”
and who once undertook a dive traversing 11km of
continuous cave which required his team to spend 21
hours underwater. Unsurprisingly, cave diving is, by
its nature, very dangerous. If something goes wrong
in a submerged cave, a diver can’t surface without
making their way out of the cave. Normal diving
issues become more complicated with the added risk
of getting lost or stuck and drowning. Lots of cave
divers drown and amongst their community there
are, as a result, strong opinions about the best (ie
safest) way to cave dive. Jablonksi had some strong
opinions and in his
THE KEY TO
SUCCESS IS TRULY
UNDERSTANDING
THE RISKS IN
YOUR BUSINESS
ENVIRONMENT AND,
LIKE JABLONKSI,
WORKING OUT
HOW TO REDUCE
UNNECESSARY RISK AS
FAR AS POSSIBLE
speech he answered the
questions of what might
be called a sceptical
crowd explaining how
he had formed those
opinions and why.
The answer to each
question followed a
pattern. When asked
why he did something
a certain way, Jablonski
responded by pointing
to the risks in the
environment and the activity and explained how his
team had approached comparing and mitigating the
specific risks involved. What was impressive about the
talk wasn’t that Jablonksi’s approach was risk-free; it
could never be risk-free – he was spending hours at
a time kilometres inside underwater caves. What was
impressive was Jablonksi’s depth of understanding of
the risks and how best to mitigate them. Everything
he did or didn’t do, wear or take with him had a
rationale attached and had been considered. He
added that he wouldn’t work with anyone who
didn’t operate to the same standards as him. It
was the ultimate in taking a risk-based approach.
I often reflect on that talk when I talk to financial
services businesses about their approach to
compliance. No-one is going to drown in our
industry but CI businesses still deal with risk
every day and manage that risk. We embrace
innovative technologies such as blockchain or
crypto-currencies, we share our expertise with
emerging economies and markets and work with
new clients every day. Meanwhile even the most
vanilla of structures is open to abuse. The key to
success is not having compliance policies which
cut your risk to zero; that is impossible, not to
mention uncommercial. Rather the key to success
is truly understanding the risks in your business
environment and, like Jablonksi, working out how
to reduce unnecessary risk as far as possible.
Mitigating risk in business requires directors to
understand that risk and requires compliance
teams to engage with the business environment
a company is operating in. Some local businesses
rely on outsourced compliance providers, others
enact policies sent forth from head office whilst
many more have in-house compliance teams. All
these approaches can work but boards should
consider their own (and their compliance team’s)
understanding of the business’s risk structure
and adapt their documentation and activity to it.
Conducting a fulsome business risk assessment
is the best way to do this (which is why regulators
require and often focus on them). An accurate
assessment allows a business to tailor their processes
and policies to address specific concerns whereas
a generic off-the-shelf precedent document may
not even identify the concerns in question. Detailed
consideration of the issues in question can often
allow more streamlined, appropriate and successful
approaches to managing risk to be taken. Having
done so, one is in a position to obtain team buy-in
ensuring everyone works to the same safe standard.
At Collas Crill we frequently work with teams from
businesses who rely on us to help them control
their risk. Our first step is always the same; trying to
understand their business. Off-the-shelf solutions
don’t work for innovative, fast moving businesses
and when they don’t work, people get frustrated and
ignore them, compounding the problems, reducing
cohesion in the business and increasing the risk
exposure. Beautifully crafted documents prepared
by lawyers with no understanding of a business’s
day-to-day activity are unlikely to be a perfect fit; as
with a diver in a cave, practicality and functionality
in a specific situation are what really matter and to
achieve that we work with clients to understand their
operations. The world of cave diving is pretty far
from the world of business compliance but maybe,
just maybe we can take some lessons from it.
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