Crossing the road blind-folded is not a good idea. You risk missing the curb or running into other people. For the visually impaired people, they are trained to handle these risks. They use a cane and listen to the accessible pedestrian signal for cues. Risk-taking is inevitable in business. Avoiding risk might lead to missed opportunities.
There are five things you could do to take on the challenge.
- Understand the nature of the risk. This involves specifying the parameters of the risk including the source, timing, and the extent of the consequence. The more detailed you get, the better your chance of developing sound options to overcome the downside effects.
- Identify the best and worst scenarios. These two scenarios define the spectrum of effects that your business might experience. In estimating the effects, be as specific as you could to identifying the key impacts. Include financial and non-financial impacts in the analysis. By testing the sensitivity of the outcome to the identified parameters of the risk, you gain insight on the significant drivers that carry the most weight.
- Determine the capacity to absorb the impacts. The impacts could trigger a need to reallocate funding or shuffle employees to meet the unexpected demand. If your business is not prepared to make the adjustments quickly, it could cause major havoc to the day-to-day operations. Engage the key personnel and ensure that there is room to manoeuvre.
- Plan the course for action. The action plan needs to contain sufficient details on how to manage the different elements of the risk. It is inadequate to leave things open-ended because things could happen quickly. You might not have time to devise proper contingencies then.
- Be prepared to make changes. A good plan lays out what to do. A solid plan identifies the interception points where adjustments could be made to refine the approach and accommodate the unanticipated. You have the support and commitment to move forward.
Though there is no guarantee that everything would fall into place, the preparation allows you to have a decisive plan. Just like crossing the road blind-folded, it is a risk but you could be prepared to succeed.