There is often a significant amount of financial, internal structural, legal, and in fact public damage that can result from the unseen consequences of a given course of action. These are the costs that can damage a business, and sometimes catastrophically, thus severely impacting, if not ending the businesses future.
Risk management has been specifically brought into the business management arena so that the impact of such errors is eradicated, if not minimised at least. Proper thought before acting is always a good thing, that’s why not writing letter when angry and drafting responses to emails without an addressee until you are truly satisfied with the content are really good forms of risk management.
The down side to risk management though is that you can easily design a system that is so risk adverse that you miss profitable or growth opportunities that others will take up and beat you because you were excessively risk averse.
Peter Gosnell on his web page “Insolvency News Online” this week focuses on the potential ‘fuelling’ impact that new regulatory functions may well bring to the table. It is a particularly well written and well thought out piece.
Business decisions are in fact a microcosm of life and are all subject to basic laws of nature, cause and effect. In life there is the adage that should you go out seeking revenge then dig two graves, implying that you too will die in the process. This is even more true in the commercial world, if you seek to extract your pound of flesh, or money, or product, or whatever it is, then expect it to take twice as long, and cost twice as much (at least) and only have at best half the impact that you want.
Those that focus on such activities routinely have usually found their way through the insolvency door much faster than expected and with a chip on their shoulder that says – it’s the other guy’s fault.
However when it comes to misguided consequences in legislation it can usually be put down to three fundamental reasons: –
- Poor (or shocking) drafting,
- The fact that the existence of an out clause for friends is critically in focus, and/or
- That there is an ulterior game in play.
In the case raised by Peter Gosnell he is highlighting the fact that it would appear to be the third of the options above that is at fault.
Phoenixing is a major problem but whilst we continue to not hit the problem head on and continue to increase the legal costs associated with controlling it then it will flourish. Actions at present will no doubt cure more by accident than by plan because that expert in it will work around the complicated laws to continue to achieve their aim.
Whilst ever we focus on everyone being a criminal, then it is easy for the real criminal to hide in the pack. The unexpected consequences will be rising insolvencies, and this will be exacerbated in the future by the increasing disposition of employees by artificial intelligence and the like, because it will be they that will be forced into micro businesses.
It will be they that will do their training on the job, and likely fail, and try again, and possibly fail, and so forth… and thus the phoenix will continue to rise. To the individual trying to make a living, it will be seen as tenacity, commitment, and perseverance. Criminal or human? that is the question.