Top 5 Tips to Manage Risk
The analysis and management of risks is not a new phenomenon – the process has been taking place in the majority of organisations for many years. However, the way in which risks are managed is crucial to whether they become failures or successes. This post aims to discuss risk management in a different view to traditional risk management articles. Like traditional procedures, readers are encouraged to make educated risks with contingencies in place, but unlike traditional advice, I’m urging readers to be confident in their ideas, to ‘go with their gut’, and to learn from the process if they fail. These are my top 5 tips to manage risk:
1. Take educated risks
An educated risk involves planning, preparation and the acquisition of detailed information. Ensuring you are not taking a risk just for the sake of it is an important process. Although it is great to try and be innovative, there must be a rationale behind why you are choosing to take the risk. Do your research, and weigh up your decisions before taking the plunge.
2. Forecast what could happen
An important step in the process of taking a risk is evaluating what could happen as a result of your choice. Get your team together and brainstorm both the positive and negative outcomes that could arise from the risk. Ensure these are written down, and ranked in order of most threatening to least threatening. This will be a crucial part of your evaluation and decision as to whether it is an educated risk.
3. Create contingencies
The reality is, there is a good chance that the risk you take could backfire. Don’t avoid this possibility and expect it to be successful; ensure you plan for both the good and bad outcomes that could occur. Having contingencies in place can help you to deal with issues in a rational and well-thought-out manner.
4. Be confident in your ideas
Although the above points are enough to scare you off from taking any risks, I really do encourage you to ‘go with your gut’ and be confident in the ideas you put forward. There is a well-known saying which says ‘not taking risk is the greatest risk of all, and not taking a risk worth taking is a total loss’. Although there may be some outcomes that could not be in your favour, if you are confident that there are positive benefits to come from the risk, go for it!
5. Learn from the risks that didn’t pay off
Don’t be discouraged from risks that didn’t work in your favour – these are the best stepping stones for success next time. One of the worst mistakes a person can make post-failure is not using it to their advantage. Analyse what went wrong, how you could do it better next time, and grow from the experience.
Do you have any other tips to manage risk that I could add to the list? I welcome your thoughts or questions in our comment box below.
This article was written by Laura Hutton on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources have been used to prepare this article: Position Ignition and Dhaka Tribune.