1) Risk Assessment
What is the opportunity you are considering?
What are the potential risks related to pursing this opportunity?
The point of this exercise isn't to convince you that there is no risk or nothing to fear. Rather than pretend we can simply will ourselves into a positive outcome, we want to ensure that we are following best practices by identifying risks prior to making decisions.
2) The Risk Formula
A simple tool for calculating risk is to start with the end. The risk formula starts by calculating the worst case scenario for the opportunity than an organization or individual is considering. Can you picture it?
If we go down this path, what could (and probably will) go wrong?
If everything went wrong and we completely failed, what would that look like?
Could we survive the worst possible outcome?
3) The Classic Pro's and Con's
Sometimes those tools that are tried and true are considered such because they work. Referring back to our risk formula, if we cannot survive the worst possible outcome we will have to ask ourselves honestly if pursuing our opportunity is worth the reward.
Does the potential reward (which isn't guaranteed) outweigh the potential losses?
Are the risks low enough that we can offset our losses as we pursue our opportunities?
Are we in a position that we can afford to move (or not to move)?
Failure to launch can be just as traumatic to our long term growth as launching only to fail. As we have noted previously, some of our most creative solutions and our life long lessons are born from failures along the way that have caused us to adapt.
4) Failure to Plan is Planning to Fail
We have considered the worst case scenarios, and we believe we can survive them.
We have analyzed our opportunities and believe that we must make a move on them.
The risk is identified, the fear of failure has been addressed and not it's time to prepare to move forward. Smart operations are not oblivious to risk nor do they sweep their fears (or reservations) under the rug, they make them visible and work for progress without allowing fear to deter them from the goal.
Much is made of risk, but fear of failure and/or fear of success may be the biggest underlying obstacles to personal as well as professional growth. The homework has been done, the map has been laid out to the best of everyone's abilities, and so it is time to get the wheels of opportunity moving.
Action may lead to unexpected forks in the road but inaction will only lead to the eventually demise of having a fork stuck in your operation. Adaptation should be valued over deterioration.
Risk Management Best Practices in Business
Risk management should be a process in the decision leading to opportunity identification, growth mapping and the celebration of a job well done.
Risk management is essential because growth is essential and there is no growth without some level of risk.
Risk management does not stop the engine, it guides the vehicle safely through the obstacle course of growth and vision.
IZ Ventures - business coaching & consulting. We don’t just consult - we help you Connect, Collaborate & Conquer.
In The DYOJO our goal is to help you discipline your mind and habits for growth. More info.