Australia Post Chair, John Stanhope, urges directors and management to update risk skills to tackle the challenges of strategic risk
The digital future is here
As Chairman of Australia Post and director and Audit Committee chair of AGL, John Stanhope has been in the hot-seat for some of the most seismic changes to the business landscape in recent years.
Stanhope warns that market risks are accelerating, with new technologies changing customer behaviours quicker than ever before. He cautions that companies without a handle on these strategic risks will see their revenues take a steep dive — fast — and encourages boards and managers to upskill in risk management to be equipped for these challenges.
Boards must ‘own’ strategic risk
According to Stanhope, boards today must have ownership of strategic risks because risk and strategy go hand in hand. Boards should start by identifying what the risks are to the sustainability of the company and come up with the strategy to address those risks. He draws a difference between mere ‘planning’ and ‘strategy’, arguing that planning is an exercise in extrapolating from the past to make decisions about the future. But strategy will always be challenging as it involves blue-sky thinking — that is, imagining what an uncertain future might look like.
Australia Post and the onslaught of digital disruption
Stanhope points to Australia Post as an example of how digital disruption and technology are changing customer behaviours faster and with greater impact. The company’s letters business has suffered with declines at 7% a year.
And while the parcels business has grown thanks to online shopping, it remains a challenging revenue stream to maintain with customer preferences changing at flash speed. Concepts of ‘convenience’ have evolved very quickly necessitating quick responses from the company. Once upon a time, customers accepted that missed deliveries had to be picked up from the post office. But as complaints rose about the hassle of having to physically visit the post office during business hours, Australia Post introduced 24/7 parcel lockers. Yet within months, people had also become unhappy about making special trips to the lockers and instead now have their parcels delivered to work.
Change is happening faster and with greater impact today. Companies must have both insight and foresight about their customers and competitors to be successful. Being on top of strategic risk allows boards and management to predict both the changes that will pose life-threatening risks as well as those that will present positive opportunities for their business.
Stanhope urges directors, managers and governance practitioners to prepare for the future by updating their risk management skills and strongly supports Governance Institute’s postgraduate risk courses as a valuable resource to tackle this new frontier.