A word from the CEO of Sancert on Risk Measurement
Leon Swart, CEO and founder of Sancert has been in the management industry for over 30 years as a business owner, offering products and services for ISO quality and risk management.
I am always fascinated at how many large and small companies bog themselves down with flavour of the day business philosophy, guru idolism, quality and risk measurement tools followed by a string of meetings to discuss and plan. Surely all the energy, time, cost and outsourced fees for all the above should be considered a risk in itself?
If a company measures its wall to wall cost so it can determine an overall running cost per hour, then consider the time spent on all the above items- the investment will definitely astound you! Then consider that the investment is direct profit loss, meaning (in simple terms) if that cost is R50 000 and your profit margins are 25%, the next R200 000 of business just covered those internal costs. Plus, you have lost all the time spent making that profit.
I can’t tell you how many times I have seen top management in EXCO meetings debating a R20 000 expenditure for half an hour. Six top executives at a running cost to company of easily R2000 per half an hour is R12 000, and then of course that time is lost and cannot be spent on something else, so in essence R24 000 has been spent on a R20 000 decision.
So my argument is very simply put, but my point is; we spend way too much time and resources nowadays without actually understanding the cost. The real basics of a company is simply to make a profit.
That should be the only risk measured.