Partner, RSD Solutions Inc.
www.RSDsolutions.com
info@RSDsolutions.com
I recently reread an article in The New Yorker by Atul Gawande titled “The Checklist”[1]. The article was expanded into a book called the Checklist Manifesto. Here is the Amazon link for the book. http://www.amazon.com/Checklist-Manifesto-How-Things-Right/dp/0805091742/ref=sr_1_1?ie=UTF8&s=books&qid=1277070911&sr=8-1
The premise of the article is that in a hospital setting – particularly the intensive care unit – that a simple checklist can save lives. To use a simple checklist in such a complex and fast paced environment with a full team of highly trained professionals might seem like carrying a squirt gun while driving a fully armed tank into battle. What is the use of such a flimsy and simplistic device as a checklist when the situation is covered by experts who have performed the necessary routines hundreds if not thousands of times? The use, as Dr. Gawande shows is that it works and is very effective at saving lives in the hospital. Case closed!
It only takes a moment’s thought to realize that if a checklist is useful in the intensive care unit of a hospital, then it might also be useful in the risk management operations of a company. While I will be the last one to be a proponent of bureaucracy, there are definitely some areas of risk management that could benefit from the use of a checklist.
As one example of where a checklist might be considered useful, consider the case of conducting a hedging transaction. This relatively straightforward process involves dozens of decisions and factors. Admittedly some of the decisions are trivial (for example does the bank counterparty have an up-to-date ISDA agreement in place with the company?), but others are more subtle (such as the completion of the analysis of what it does to potential credit flexibility with the bank counterparty). If one of the decisions or factors has been missed, then potentially a serious negative risk situation may arise.
As Dr. Gawande argues, checklists do not have to be overly complicated or time consuming to be effective. What counts is that the checklists are available for the critical procedures, and for those procedures they cover the necessary components that help to ensure a successful intervention.
What areas of your organization do you think might be able to benefit from a checklist? For each of the checklists, what might be the steps included? How much more effective and efficient might your risk management operations be because of this simple tool?
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