Balancing your risk with reward
Entrepreneurs and business leaders take risks, because with risk comes reward. ‘He who dares wins’.
But risk, if not managed, has a downside. There is always something to lose; profit, reputation, share value, customers or staff. So what to do?
Whilst relying on luck for a successful outcome is one solution; implementing a risk management process is a far more effective way to manage any potential downside risks and realise upside risks.
Key risk management questions:
- What things could happen to stop us achieving our goal?
- How likely is it that it any of these will happen and what can we do to reduce that likelihood?
- What would the impact be on the business if any of these things do happen? How can we minimise that impact?
- What needs to go right? How can we increase the likelihood of those things going right?
- If we can’t reduce the likelihood or the impact to a low enough level, should we go ahead?
Effective risk management ensures the achievement of business goals.
Effective risk management ensures the achievement of business goals. It protects service delivery and quality, reputation, assets and the well-being of employees and customers, as well as the integrity and resilience of information systems, particularly relevant in an environment of increasing cyber risk. It also avoids criminal prosecution, litigation, financial loss, fraud or corruption.
Asking these questions is not an indication of lack of faith in the people in the business and their ability to do the right things and do them well. Answering these questions will ensure actions and decisions taken maximise the chances of success and reward.