Partner Article
The risky business of business
If you and your team are constantly thinking that risk is something that needs to be protected against, or even feared, then you may be denying your business opportunity.
Fearing risk breeds a mindset that denies the possibility that risk can deliver a sound strategic advantage and unlock creative and innovative opportunities.
Start to view risk as a strategic advantage, not just a compliance issue.
Have a conscious awareness of risk but start asking “What are the risks inherent in this activity, and how can we turn these risks into strategic advantage?”
Train your people to view risk as a strategic opportunity and actively look for risk in their own activities.
What do you need to know about risk?
It is commonly accepted that there are 3 types of risk:
- Hazard risk, which can be the threat of negative things happening. It’s the risk of someone getting injured or physical risks such as things falling down, and is most often the type of risk that is insured against.
- Opportunity risk is about the possibility of positive things not happening. It’s where the decision is too long in the making, and the opportunity is lost. Or it could be that opportunity is not recognised in the first instance (“that’s not the way we do it”).
- Uncertainty risk is about the potential that the actual does not meet the anticipated. For example customers not taking up a new product or too much reliance on a contract or a source of income.
What should you be doing about it?
Here’s a list of action points you should be taking either as a Board or a team:
- Agree on the 3 or 4 critical risks facing the organisation. Ensure those risk are being monitored and robust risk management strategies are in place for them.
- Charge the Board or senior team with the responsibility of approving and monitoring the risk management policy. It commits them to best practice risk management.
- Determine key performance indicators (KPIs) for the CEO.
- Embed risk into the strategic discussions and analysis of the Board.
Top tips to embed risk
- Do a SWOR (not a SWOT) analysis i.e. Strengths, Weaknesses, Opportunities and Risks on your business.
- Only agree project or action plans if a risk element has been added to the plan.
How do you view risk in your organisation? Something to fear or a strategic opportunity?
This was posted in Bdaily's Members' News section by Malcolm Gallagher .
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