Get house in order if businesses are to embark on risk

Queensland Premier Annastacia Palaszczuk, right, and Chief Health Officer Dr Jeannette Young. Picture: NCA NewsWire/Tertius Pickard

Just three short months ago in a speech to the Committee for Economic Development of Australia, Reserve Bank governor Philip Lowe spoke about the factors needed to facilitate Australia’s economic recovery from the first recession in 30 years.

One such factor was the need for Australian business owners to be able to take risks.

Lowe warned that being overly cautious, among other things, could undermine our economy and the speed of recovery.

Wise words and true. Effective, strategic risk management is at the heart of every successful private enterprise, and the private sector is the engine that drives the Australian economy. From the smallest business to the largest, successfully managing risk happens moment by moment, day by day.

If there’s one thing this pandemic has stripped bare, it is just how inept the risk-management capability of the states really is. The exception to this is, of course, the government of NSW, which has offered a masterclass in how to get it right. Elsewhere, it has been and remains a sham. Want proof?

Look no further than the dog’s breakfast of regulations on border control, and how greatly they vary from state to state. Most ignore the definition of a COVID hotspot as set out by the federal Chief Medical Officer. All claim to be following “health advice”. Never has that term been so abused.

Back to Lowe’s comments and the logical question is, how are businesses expected to boldly take risk while concurrently being hobbled by bureaucratic overreach fuelled by poll-conscious state premiers? Bureaucracy is not a space renowned for either agility or having a robust risk profile.

If those dictating under what conditions our businesses can operate, how we live, when the roller door gets slammed shut don’t have the commensurate level of experience in the real economy, how can they identify the risk, let alone analyse and manage it?

Based on what I’ve seen, I’ve come to believe your average 10-year-old, sizing up the tree they’re about to climb, has a better handle on risk management than the boffins making up the COVID rules as they go along. Rules that have contributed to devastating social, health and economic impacts. The states that continue to react rather than respond, slamming the gate shut without pausing to assess the risk, do so without considering what is the acceptable level of ongoing collateral damage and who must wear it.

Case in point, the cost of the botched Victorian hotel quarantine scheme for which nobody is responsible (the decision was all about the vibe) is now emerging, with that state leading the nation in corporate collapse in November. One hundred and fifteen businesses went to the wall. Behind each business is a family. A story. A heartache. More than likely, a business loan secured by the family home. What went on in Victoria was not risk management, it was a panic-driven fight for political survival. Elaborate behind-covering. If you don’t believe me, consider that government’s self-congratulatory run of more than 100 consecutive media conferences, while avoiding accountability, choking its economy and telling Victorians they had to do more.

In Queensland and in Western Australia, large parts of the tourism industry are on their knees. Billions have been lost. On paper, big numbers. In reality, individual operators, usually family-run outfits, hanging on for dear life. The hospitality industry, Australia-wide, is likewise in a world of pain.

Coast to coast, hundreds of millions of dollars’ worth of fruit and vegetables have been left to rot because there’s nobody to do the work. Why? Because there’s still restricted movement. Why? Because the decision-makers still haven’t worked out how to effectively manage the risk. And of course, the heartbreaking social toll. The ongoing, needless family separations.

These state governments have had almost a year to get it together. Seems someone’s always in an election cycle. Ahhh, but these premiers are keeping us safe. If we are to extrapolate this to a logical conclusion, then sorry folks. Nobody drives a car ever again. Nobody has a wine.

One thing I believe is that when a leader leverages fear, they’re no leader at all. They’re just the person who got voted in.

A lot has been said about business taking the opportunity to diversify or change direction. That is easy to say when you’ve never signed off on payroll, or been responsible for people’s wages, mortgage payments and school fees.

Removing all risk does not create an environment which encourages measured risk taking. Asking businesses to take greater risk is one thing, but disingenuous when (for example) national cabinet is still squabbling over the definition of a hotspot. Nobody is advocating a free for all, nor carelessness, but risk management is about proportionate rather than a panicked response. We need more of the former before it’s too late.