Very often we try to avoid even mentioning the word “risk. Risk management, therefore, remains to be an undiscussable topic.” But, risks, despite prejudices, always exist. Risks can be foreseeable and unexpected. At the same time, we can consciously take the risk – in other words: we are responsible for taking risks. So how do you manage risk? And can risks be managed?
Our answer to the above question. “Yes, risks can and should be managed. Especially if you take the risk consciously.” Moreover, risks can be categorized into two main categories: risks can be controllable (the micro-level of an organization) and uncontrollable (macro environment of a business). Besides that, modern risks can be classified into more than 50 classes.
Let’s focus on unforeseen risks first. The nature of such a risk is spontaneous. Especially in business. You, for example, have a serious contract. Unexpectedly your business partner begins to behave strangely: a company delays payment, for instance, or blocks communication etc. Of course, you can immediately initiate a process at the appropriate court. But by this initiative, you are expected to experience at least a contract breach and the subsequent loss of business cooperation, or economic damage, or even ruining of a business reputation. And it is mostly your reputation, which will be under dangerous circumstances because due to non-fulfilment of business obligations by your partner, in your turn, you will be limited in fulfilling your business obligations.
How to act in case of unforeseen risk?
- Assess all possible areas of risk.
- Assess the worst consequences, if any, which can be predictable or estimated.
- Make an action plan to prevent these consequences.
- Strengthen the zones with additional stabilizing actions. Actions that could amplify further, potentially minimizing the possible impact of risk.
What to do if you take the risk consciously?
- Analyze all related aspects of the business. By related, we mean those aspects that may be exposed to risk as consequences.
- Strengthen all the areas involved with additional action.
- Consider all possible consequences in detail.
- Work out all the scenarios for possible outcomes.
- Activate the risk.