MANAGE RISK
WHY IT MATTERS
Risk is a part of any organization’s work. The degree of risk in a leader’s work may be small or it may be great, but it will always exist. It cannot be negated or ignored. The skill of a leader in managing risk can mean the difference between being best-in-class or being stuck in the middle of the pack. Leaders who successfully and wisely manage risk use it as a vehicle to jump ahead of their competition and create break-through wins for their organization. Leaders who don’t effectively manage risk can see their best-laid plans and intentions frustrated. Looking back, they will see that they missed opportunities that could have provided a significant return on investment if they had been willing and wise enough to take a chance.
WHAT IT LOOKS LIKE
Leaders that successfully manage risk see it as a natural and essential part of doing business. They know risk only needs to be feared if it can’t be recognized, avoided, and managed. They know their business will thrive or fail, in part, based on their ability and willingness to identify risk and manage it well.
Leaders that manage risk learn to identify where risks exist in their work. They worry most about the risks they can’t see they are taking. They put in place systems and processes to flag risks early. They become expert at sighting risks before they become a reality. They look at the full spectrum of potential internal and external risks, including those dealing with finances, technology, human resources, outside competition, accidents, safety, natural disasters, supply chain stoppage, process breakdowns, etc.
Leaders that manage risk are savvy in choosing when to embrace risk and when to avoid it. They prioritize risks that could occur. They assess and rate their tolerance for each. They embrace risks they are confidant will help them gain a competitive edge and are quick to turn away from those they feel are too precarious to accept.
Leaders that manage risk know how to mitigate a negative risk before it does its damage. They extinguish risks that could threaten the organization’s ability to achieve its results as soon as they are identified. They draft and implement risk containment strategies and gather the necessary resources to implement mitigation projects when required.
Leaders that excel at managing risk are willing to make decisions without having answers to all their questions. They know sometimes you just have to do what you feel is right, even if you can’t prove it. Instead of trusting themselves to make all the decisions, they rely on the best minds in the organization to help them keep the organization out of harm’s way.
Leaders that successfully manage risk create an organizational culture and climate that appreciates, respects, and knows how to accommodate risk instead of constantly fearing or avoiding it. They train their people on risk management processes, strategies, procedures, and tools. They give people the responsibility, capability, and accountability to manage the risk inherently involved in their work. They make it safe for people to ask questions and discuss concerns when they arise.
BELIEFS
BEST PRACTICES
SELF-REFLECTION
Risk is a part of any organization’s work. The degree of risk in a leader’s work may be small or it may be great, but it will always exist. It cannot be negated or ignored. The skill of a leader in managing risk can mean the difference between being best-in-class or being stuck in the middle of the pack. Leaders who successfully and wisely manage risk use it as a vehicle to jump ahead of their competition and create break-through wins for their organization. Leaders who don’t effectively manage risk can see their best-laid plans and intentions frustrated. Looking back, they will see that they missed opportunities that could have provided a significant return on investment if they had been willing and wise enough to take a chance.
WHAT IT LOOKS LIKE
Leaders that successfully manage risk see it as a natural and essential part of doing business. They know risk only needs to be feared if it can’t be recognized, avoided, and managed. They know their business will thrive or fail, in part, based on their ability and willingness to identify risk and manage it well.
Leaders that manage risk learn to identify where risks exist in their work. They worry most about the risks they can’t see they are taking. They put in place systems and processes to flag risks early. They become expert at sighting risks before they become a reality. They look at the full spectrum of potential internal and external risks, including those dealing with finances, technology, human resources, outside competition, accidents, safety, natural disasters, supply chain stoppage, process breakdowns, etc.
Leaders that manage risk are savvy in choosing when to embrace risk and when to avoid it. They prioritize risks that could occur. They assess and rate their tolerance for each. They embrace risks they are confidant will help them gain a competitive edge and are quick to turn away from those they feel are too precarious to accept.
Leaders that manage risk know how to mitigate a negative risk before it does its damage. They extinguish risks that could threaten the organization’s ability to achieve its results as soon as they are identified. They draft and implement risk containment strategies and gather the necessary resources to implement mitigation projects when required.
Leaders that excel at managing risk are willing to make decisions without having answers to all their questions. They know sometimes you just have to do what you feel is right, even if you can’t prove it. Instead of trusting themselves to make all the decisions, they rely on the best minds in the organization to help them keep the organization out of harm’s way.
Leaders that successfully manage risk create an organizational culture and climate that appreciates, respects, and knows how to accommodate risk instead of constantly fearing or avoiding it. They train their people on risk management processes, strategies, procedures, and tools. They give people the responsibility, capability, and accountability to manage the risk inherently involved in their work. They make it safe for people to ask questions and discuss concerns when they arise.
BELIEFS
- Not all risks are created equal. You have to know which risks matter and which risks can be ignored.
- When it comes to risk, the question is not whether you can avoid it, but whether you can identify it before it is too late.
- If you aren’t willing to take risks you will never rise above the status quo. It’s the smart risks people take that propel them ahead.
- Fear risk enough to motivate you to take the time to identify it and prepare for it, but not so much you are paralyzed by it.
- You can’t eliminate risk from your work, but you can equalize it with strong risk management plans.
- The only way to see every angle of a risk is to bring other people together to help you analyze it through different lenses.
- The first time you react negatively to a risk gone bad you will shut down the willingness of the organization to ever take risks again.
- You need to be willing to miss on a few risk decisions if you want to be able to connect when it really matters.
BEST PRACTICES
- Know which risks to take and which to avoid.
- Be willing to take calculated risks.
- Identify potential risks to your work.
- Be willing to step into the unknown.
- Study the vulnerability of your work.
- Be willing to go out on a limb for an idea.
- Put in place controls to prevent taking bad risks.
- Don’t take risks without data to support you.
- Identify the likeliness of risks occurring.
- Weigh any potential risk against its benefits.
- Judge the profitability of the risks you take.
- Encourage others to take appropriate risks.
- Identify ways to reduce risk probability.
- Create an environment that isn’t afraid of risk.
- Put in place processes to manage risk.
- Use the best information to make risk decisions.
- Be transparent about the risks of projects.
- Look for risks in decisions others make.
- Have decision parameters you use.
- Calculate opportunity costs of potential risks.
- Don’t be afraid of taking a well-calculated risk.
- Have back-up plans for when risks go bad.
SELF-REFLECTION
- Do I see risk as a natural and essential part of doing business, or do I try to avoid it whenever I can?
- Do I know where the risks exist in my work, or do I invite the possibility of being hurt by the unknown?
- Do I have systems and processes in place to flag risk before it is too late, or do I leave the door open for risk to go unnoticed?
- Do I embrace the risks that prove to give me a competitive edge, or do I avoid any risk-laden investment?
- Do I have plans in place to mitigate risks, or do I apathetically wait and hope I can resolve them if they arise?
- Do I enlist the help of others in assessing and making decisions regarding risk, or do I try and do it all alone?
- Do I train and give other people the tools they need to effectively manage risk, or do I leave them to their own devices?
- Do I create a culture that is willing to take calculated risks, or do I prohibit the organization from taking any risk at all?
- Don’t get burned by risk because you are too over confident in your ability to predict, control, and contain it.
- Don’t overcomplicate your strategies to mitigate risk when a simple plan of action might be all you need.
- Don’t become so paranoid by the idea of unknown risk that it cripples your ability to confidently move forward.
- Regardless of industry, a risk management department is needed in every organization.
- Weighing the risk or any operation takes time.
- I encourage those I work with to take risks in their job.
- Taking a risk and failing, is the single greatest learning tool.
- The risk is worth the reward is ‘always’ a true statement.
- I am more comfortable in the “unknown” than the “known.”