External Factors Are Not the Root Cause of Problems

External factors can cause problems. A useful review also asks what made us vulnerable, what uncertainty we recognized, and whether reasonable precautions were available. Consider these explanations:

• Q: Why are you behind on your budget? A: The economic environment deteriorated; it's not our fault.
• Q: Why is the project not delivering as planned? A: The consultants have let us down.
• Q: Why are you late? A: My alarm didn't work, my train was delayed, etc.

The question is whether we could reasonably have reduced the exposure or changed the plan. For an important journey, a backup alarm and an earlier train may reduce the risk of lateness. That does not make every disruption foreseeable or every precaution worth its cost.

In aviation, bad weather is a risk factor. So, pilots obtain up‐to‐date weather forecasts and choose a flight path and time that should avoid storms if they can. However, suppose they foresee a severe storm en route, potentially outside the safety parameters of the aircraft. In that case, they will ask for an adjustment to the flight plan. And if the weather is very bad or forecast to be a grave concern, the flight might be cancelled or delayed.

A Bowtie-style risk review considers the following:

1. you detect a possible threat;
2. you consider measures that you think will protect you;
3. you hope that if there is a problem, you will be able to deal with it, but
4. how well do you know and understand the scale of risk the external threat poses? And
5. how certain are you that you can handle what happens? And, if you are not, can you take another course of action?

After all, how many of us have seen a horror film or a film about aliens and thought, ‘For goodness’ sake, don't open that door!’

As Carl Sagan explains, ‘… it is far better to grasp the Universe as it really is than to persist in delusion, however satisfying and reassuring’.

Here are some more examples where external factors entail risk or uncertainty, alongside some steps that might be taken to understand the situation better or mitigate the threats posed:

• When moving into a new market, managers often engage a consultant to do market research and competitor analysis. The consultants will help them make sales and marketing decisions ‘with their eyes open’.
• If concerned about the cost of supplies for key materials, or utilities, managers may consider (i) entering long‐term contracts at fixed prices, (ii) using a new supplier or even (iii) acquiring a supplier if the price is right. However, before proceeding, the manager will likely commission ‘market analysis’, ‘due diligence’ or a ‘supplier evaluation’. The due diligence helps managers decide whether the price they are paying is appropriate and understand the risks that need to be managed (e.g. through proper warranties or contract terms).
• If concerned about possible changes in laws and regulations that might impact what the organisation does, managers might speak to experts in the field and – if the stakes are high enough – consider lobbying activities directly or indirectly through an industry group or other professional association (recognising what is permitted by law).
• In a medical context, before treatment, a doctor will endeavour to review the patient's medical history and the medication they are taking, check their blood type, etc.; they won't just assume every patient is the same.
• From a financial perspective, various points arise, from potential exposures to interest rate and currency movements, to cost and market movements. Here, a manager might need to take specialist advice on the options for ‘hedging’ and contemplating different out‐turns and how these will be managed (e.g. by a freeze on non‐discretionary spending).