Risk Managing for Risk Takers

If you are not dealing with at least some risk in business, you most likely are not doing much business at all. Risk must be part of a business in order for that business to be successful, and risk management must be on point to deal with that risk. In many cases, the biggest risks carry with them the biggest rewards, but only if those risks are well managed. Rémy Cagnol from Deskmag.com believes the key to success is in proper risk analysis. Of course, risk managers are necessary, but being able to do quick risk assessment at an individual level is important. The trick, as Cagnol notes, is to follow four steps: identify, analyze, respond, and control. The truth is, risk is everywhere you look when it comes to business projects, and those who deal with it best are those who have the least trouble identifying it. Cagnol suggests that a good place to start is to make a list of approximately 20 risks that could be a real possibility. From these risks, you must decide which ones would carry with them the gravest consequences. This way, you will be more able to categorize your risks “in terms of probability of occurrence and impact.” According to Cagnol, the next step is to find the best method of responding: Find the positive response. Here we come to the most important part of the work. You have multiple choices of response for each risk according to its position in the matrix: avoid it, transfer it, accept it, ignore it, mitigate it or understand it as a contingent event. Some examples of risks with low impact and probability could simply be ignored, while risks with high impact and probability should be avoided. Choosing to avoid a risk will consist of eliminating the threat at the very beginning of the project. You can also choose to transfer the responsibility of risk to another party, which basically means you invest in insurance, or accept the risk and the consequences by simply acknowledging it with the rest of your team. Cagnol goes on to suggest that, if you have set a contingency plan, you must make a list of everything that needs to be done in order to properly identify the “risk trigger.” If you chose a mitigation plan, be sure to focus on the “what ifs” and create a solid set of steps that will be taken should a risk occur. These things can be difficult, Cagnol points out, when working in a team because people tend to want to focus on the here and now. Communication conducted on a regular basis is the most effective way to ensure that your team is on board with your risk management plans. We have all heard that nothing worth doing is ever easy, and this is especially true when it comes to risk management. Even if you find it difficult to get your team on track with proper risk management, continue to press the importance of the issue. You must take risks in order for your business to be successful, but you must also practice proper risk management if you want that success to be long term.

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