Project Management

4 Assumptions about Risk You Shouldn’t Be Making

There are a myriad of assumptions that are associated with the word “risk.” It has such a negative connotation that everyone seems to run screaming at the very mention of it. However, in an article for Harvard Business Review, Scott Anthony shares four assumptions regarding risks that you should not be making:

  1. Inaction is the biggest risk.
  2. Manage risk.
  3. Do not encourage failure.
  4. Lack of rewards is not the problem.

Assumptions Are Risks

According to Anthony, “In many cases, the riskiest action is in fact inaction.” In today’s world, a company that does not take some risks and progress forward will inevitably fall behind their competitors. When presented with a project, you should be keeping in mind that inaction may create negative value just as much as an ill-advised project.

Good entrepreneurs do not seek out risk; rather, they recognize risk. Creating a new business is a risk-laden endeavor, especially because most new businesses fail. Entrepreneurs excel at managing risks. For example, they work with partners, build a team, or even raise money from investors.

There will never be any innovation without risk, because there will always be uncertainties in innovative projects. However, this does not mean that failure should be embraced. Failure is a bad thing, especially if it is because of something trivial that could have been avoided. Perhaps there was failure because someone did not do what they were supposed to, or maybe they did not practice enough beforehand. These types of behaviors should never be celebrated or encouraged.

Many executives become consumed with trying to develop good rewards for people in order to encourage them to innovate. Rewards are actually not the prominent problem; instead, the greater issue is the existence of punishment. Sometimes a person does everything right and they still fail, so is it really fair to punish them for this?

You can read the original article here:

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