Imagine you’re running a business. It’s a great business. Income is almost guaranteed. You’ve got a key customer who you know well. You’re employing staff, making a decent return.
There’s just one problem. On the 2nd April 2027 there’s a 30% chance you’re going to have to close the business down.
No slight reduction in turnover or profit, no residual income, no chance to sell the business. It will just cease to trade on that day.
If you were running this business, you’d be pretty focused on the 2nd April 2027.
It’s not that far away. It would probably be something you worried about almost daily.
If you understood risk management and used risk management tools, it would probably be at or near the top of your risk register.
You’d have actions in place now to do the things you believe would reduce that 30% risk.
You’d be monitoring their impact, checking if they’d reduced the risk levels.
Looking for new things you could do now that might take time to implement but will have an impact closer to April 2027.
Monitoring your risk level mitigations every month (or more often!).
Making plans for all the things you could do in the run-up to April 2027 to make sure you’re reducing that risk of a complete, sudden, irreversible end to your precious business.
Perhaps you’d be investing some of your profit now in those actions.
After all, if you can get past the 2nd April, the business is guaranteed to continue for another 5 years! Those 5 years’ extra income and profit is worth a little investment now, surely?
By now, you’ll have recognised the analogy.
Your business is your contract. The 2nd April 2027 is the last day of the contract after your rebid. And your organisation’s rebid success rate is 70% (so a 30% chance of losing).
But given those changes, do you think the risk mitigation thinking and actions we’ve described should change?
And if not, how are they applied in your organisation?
- Is losing the rebid on each of your contracts’ risk registers?
- Are there risk mitigation actions in place now that will reduce the risk of losing the contract’s rebid? N.B. If people in the business tell you the rebid’s too far away to be a risk worth addressing now, perhaps ask them what other known risks you’re deliberately not bothering to mitigate because they’re not going to crystallise now.
- Is any of your profit being allocated to investing in the things which will improve the chances of keeping the contract’s (and therefore your organisation’s) future revenue stream for the next contract term?
- Who is the person in your organisation worrying now about the future risk of losing your rebid(s), and responsible for doing something about it? (if no one, how many other risks on your risk register don’t have someone identified as being responsible for them?)
If you could take the thinking, tools and approaches you use for other risks and apply them to your rebids, what impact do you think it would have? We’ll leave the answers to these questions to you. You can probably guess our perspective!
