Friday, 15 March 2019
A rigorous stress testing workshop provided food for thought for Reside Housing Association’s Chief Executive Officer, Diane French. Here she reflects on resilience, life experience, risk management and lessons learned.
It is an interesting, if sobering, experience to think about all the things that might take you under. The more difficult question of course is what you would do to ensure you stay afloat – or, if nothing else, at least salvage as much as possible from the wreckage.
The Reside board pondered just this scenario when working through a recent Iron Grip stress testing session with the Housing Quality Network (HQN). They layered risk on top of risk until our bank covenants turned red and our cash position was negative.
We were responding to the regulator’s treatise that stress testing must include multivariate analysis of risk – test to your point of destruction. The HQN team were also clear that one thing we could be sure of was that the next crisis wouldn’t be the same as the last.
Just the week before, on International Women’s Day, I had been remembering my mother and my abiding gratitude that she somehow built some resilience into me. I’m not sure I can quite put my finger on how she did it and there are always those days when my resilience feels inadequate, when just one more thing will bring me crashing – the straw that breaks me.
In fact I recall very clearly a discussion I was involved with about resilience over 10 years ago, when I worked for our national audit office and was visiting the USA on an international learning exchange. This was after Hurricane Katrina had devastated the New Orleans area and America was asking questions about how they could build resilience into communities. I remember the conversation distinctly because I felt so inadequate in my contributions to the answers they sought.
So what can I now reflect on, from all my life experiences, that can usefully relate to the topic of resilience?
- Prevention is always a better solution. In New Orleans the poorest people suffered most – they had the least robust houses, on the most exposed land and they were the least likely to be insured.
Managing risk cannot be about mitigation after the fact, it must be built into the design of a community or business model. At Reside, when we set ourselves a value about being responsive we talked about leaning forward, reaching out and predicting needs.
- Build protective factors around you, your organisation, your community. When I studied mental health I remember the concept of protective factors mitigating the onset and severity of depression. One of Reside’s values is to be collaborative. In my life – both personal and professional – it is my partner, colleagues, friends and family who keep me afloat on the days I feel like I am sinking.
As a leader, I’ve always tried to hold on to the fact that consensus decisions tend to be the better ones, so I value teamwork. At Reside, we place huge value on partnerships.
- Learn from others. Part of what my mother taught me came from the strength she had to find on her own dark days.
Sometimes there’s a horrible blame culture, which means we distance ourselves from those that have made mistakes or we don’t know what to say, for example, to the CEO of an organisation recently berated by the regulator or press.
That old saying, ‘necessity is the mother of invention’, encapsulates the idea that people often learn more quickly in a crisis than at other times. I am very happy to learn from them, and would like to see the regulator and National Housing Federation take more of a role in sharing best practice so lessons can be learned from things that have gone wrong.
- Plan your exit. One of the reasons Hurricane Katrina wasn’t worse (bad as it was) was because the storm was predicted, so an evacuation plan was put in place and operated. I always pay attention to the fire escapes in hotels because I know that, if I am disorientated at 3am, it will be much worse if I don’t know where I’m going.
Having spent much of the last 10 years in social care, I know how tough the environment is. I’ve sat with boards and leadership teams that see mergers as a last resort, yet it is much harder to run (negotiate) when the storm has hit. At Reside, because we value our mission much more than our brand, I’m very pleased that the board is more than happy for me to know where the escape routes are – even though it isn’t 3am and the fire alarm is in no danger of sounding.
So of course we will write a financially orientated stress test which speaks of cash reserves, cost control and the potentiality of mergers – but, here at Reside, we will always keep in mind that risk management is a much bigger topic than scenario planning.