Consideration of Risk
Last week, I shared a personal reflection. As I said then, I continue to process the events. So, for this week, I thought I would take a lighter tack.
Everyone faces an issue that I feel has an unseen hand in much that goes on in our world – Risk. At Forrest, we have begun to develop a robust risk practice, bringing in two well-recognized experts in the field, our associates Rob Quail and Marc Tassé.
However, the risk I am focusing on this week is one we all face daily. It is the risk involved when making a choice. I believe that this risk greatly impacts our day-to-day lives and, in many cases, we don’t realize it.
My good friend and mentor, Jerry Rhodes, says it well; “what hangs over every decision we make is the shadow of risk”.
What I find interesting is that in my line of work, when speaking with clients, until I point out they really need to stop and assess the risk in the decision, they are unconscious of it. Furthermore, when I ask them if they have a framework for determining the risks of a particular choice, they often do not. So, we have a combination of a lack of thinking about risk and not having a way to assess risk… which is the perfect storm.
The signs of this particular combination are the following:
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Ultimately, unchecked risk becomes fear, which can paralyze people and organizations.
The natural human reaction to risk is trying to gain certainty through data and information. This search for the truth in data or observation is a falsehood and leads to procrastination as we don’t set level and dig down endlessly.
So, ask yourself how comfortable you are at assessing risk. How comfortable is your organization with evaluating risk?
These two questions lead us to determine our risk appetite. However, at the core, we need to take the risk imposter apart and assess it for its likelihood and severity. When we get good at this, we lift the veil, and we can begin to move forward in our decisions.
I can go on at length here about frameworks and the like, but our first step needs to be awareness of the need to recognize that we may be struggling with risk, and then apply our thinking to make judgements and predictions.?
Entrepreneur, Executive Manager
2 年Either way, the road of life is paved with flat squirrels, who couldn't make a decision.? Also an essential leadership skill.
Enterprise Risk Management trailblazer. Seasoned executive leader.
2 年Well said, Julian. Every organization, be it a publicly traded company, a government-owned entity, or a not-for-profit, is in the business of putting its assets at risk with the expectation of realizing some kind of return or benefit; some risk can be a source of value. Risk management activities should always be focused on driving two things: conversations (yielding better shared understanding of the role of uncertainty in the business) and prioritization (decisions on where to allocate resources to take, avoid, or manage risk).