WHERE TO LOOK

ENGINES OF DISASTER

To be more specific on attention getters, here are three big ones:

1) Is there a clear and present danger to the ongoing viability of the business?  Could the shut down of key, specific operations kill the company's ability to stay in business?  2) Is there a risk to one of the company's major new business initiatives?  3) Could something profoundly sour customer/shareholder relations?  Either general "goodwill" or a key customer?

Let's start with the first....a small matter of . . . SURVIVAL OF THE BUSINESS

Amazingly, most of real disasters can be worked around;  parts shortages can be made up from demo stock, power outages can be compensated for by overtime to get schedules back and yesterday's backup tapes can be used to recover.  Vendor-held supplies, safety stock, backordering, substitution, last week's backup tapes.   Creative people in a crisis are very resourceful.

So only a "killer risk" will get anyone's attention that's where to look.  Actually they may be the only things you should spend any significant effort on.

For example:

Would  a fire in the processing plant take months to fix, crippling the company's competitiveness or allowing a competitor a window of opportunity?  If not, keep looking.  

Would a flood shut down production for two weeks?  What would that mean?  For some businesses, it might not even impact stock price (investors understand floods, just not earnings reports).  

On the other hand, some companies don't have the resources to handle loss of the cash flow for two weeks (sidebar above).   Be specific to your own situation.