ERM at Thanksgiving – An Illustration of Risk Management in Action

It’s Thanksgiving week in the U.S. – the air is crisp, Fall colors abound, and there is a palatable excitement as we enter the year-end holiday season. This week’s holiday provides a great opportunity to reconnect with family and old friends and take stock of what we’re grateful for.

On occasion, I like to take some of the concepts we risk professionals think about in our jobs and apply them to different personal situations…take some of the same concepts we use when working with executives to develop corporate strategy and manage risks or uncertainty around that strategy.

In honor of one of our country’s greatest traditions, I thought it would be fun to provide a risk management perspective to Thanksgiving … (caveat – this is my first time doing this kind of video, so be patient with me…)

If you ever get frustrated at a lack of understanding among friends, family and neighbors about what you do for a living, perhaps this little video can be a light-hearted way to help them get what you do.

Let’s say you have a goal of inviting family and close friends to your home for a good Thanksgiving meal. This is your “corporate goal.”

The first task or activity in pursuit of this goal is to invite who you would like to attend…

Although we consciously don’t call it this, many of us will evaluate a few scenarios in this situation. What if everyone accepts your invitation, or what if no one accepts? These two scenarios are highly unlikely, so what is a realistic scenario?  50 – 75% accept your invitation?

After the invitations are sent (…hopefully at least 2 weeks before the holiday), other action steps that will need to occur in order to meet the goal include:

  • Clean house
  • Accommodations for overnight guests
  • And let’s not forget the food!

I’m sure there are other action steps, but you get the idea…

After you’ve identified these action steps, you have to assign ownership.

Perhaps the kids can be responsible for cleaning house while you, your spouse, and some guests focus on the food.

This, of course, brings up an important question in the back of your mind – what are some risks around these action steps and goals? For the purpose of our illustration today, let’s just focus on getting the food prepared and on the table. These risks and considerations can include:

Having food people can’t eat. To address this risk, you need to ask about any food allergies or other dietary restrictions during your planning and preparations. (I have close friends with a semi-strict diet on gluten and dairy for health reasons.)

Having enough food to eat. Try to get an accurate number of guests and coordinate with a loved one to ensure there will be enough. And always add about 10-20% extra for those who like their second helpings or teenagers with the bottomless pit for a stomach!

Safety accident. If your home is in an area with lots of snow/ice, could a slip and fall derail your plans? Have salt to sprinkle on the sidewalks and driveway, keep towels by the front door for wet drops, and a place for wet shoes and jackets to be placed out of the way.

This can have a big impact on your objective. If you’re cooking the meal at home, the cost for a traditional Thanksgiving meal is thankfully (…no pun intended) flat or down slightly in the last few years according to a survey from the American Farm Bureau Federation.

However, if you’re in the kitchen all the time, how will you get to spend time with loved ones?  To get around this and have more time to socialize, you can purchase a done-for-you meal from a local restaurant or grocery store, but in some cases, this can double your cost depending on which restaurant you choose. A mid-range option is to get some of the more time-consuming sides and desserts prepared for you, allowing you time with family and friends.

If you choose to cook at home, your risk of an equipment malfunction could derail your plans, or the neighbor’s dogs could rush in and steal your turkey like this scene from the classic movie A Christmas Story (… I hope you can peg the likelihood of this scenario at effectively zero).

Purchasing the meal from elsewhere opens up the risk that the vendor will not be able to deliver for whatever reason. You have to compare these risks against your personal “tolerance” and your priorities (cooking vs. family time) to determine the best route for achieving your objective.

And last but not least, what if people who RSVP do not show or cancel?

These are just a few examples. Of course, as I say often regarding risk management, there are factors that will be specific to your situation.

Keep in mind too that addressing these risks and opportunities doesn’t mean you need to have some formal identification and assessment process. Regardless of any risk management background, we tend to embed this thinking into our decision-making before, during, and after.

I hope you have found this video entertaining…and helpful for explaining your work to family and friends.

If you’re traveling this week, please be careful, especially considering that over 55 million Americans are expected to travel for this year’s holiday, which is the highest number of travelers since 2005 according to AAA.

And let’s not forget the weather and how that can impact travel as well…

To everyone reading, regardless of where you are, Happy Thanksgiving! I look forward to spending some quiet time at home with my family over this long weekend. We’ll see you in December.

References and Further Reading:

https://www.fb.org/newsroom/farm-bureau-survey-thanksgiving-dinner-cost-rises-only-a-penny

https://www.thepennyhoarder.com/save-money/order-thanksgiving-dinner/

https://newsroom.aaa.com/2019/11/aaa-more-than-55-million-travelers-taking-to-the-roads-and-skies-this-thanksgiving/

https://www.erminsightsbycarol.com/personal-risk-tolerance-hurricane-michael/

https://www.erminsightsbycarol.com/scenario-planning-questions/

https://www.erminsightsbycarol.com/risk-owner/

https://www.erminsightsbycarol.com/risk-appetite-tolerance-decision-making/

https://www.erminsightsbycarol.com/disjointed-vs-embedding-traditional-vs-erm/

Featured image courtesy of Craig Adderley via Pexals.com

 

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