Three Ways to Mitigate Risk in Uncertain Times

As humans, we try to limit the number of uncertainties in our lives. We want to feel like we’re in control. We want to feel “safe.” Craving this feeling is only natural. However, playing it safe is often very limiting, in both life and in business. We need to equip ourselves to take risks, and a little planning goes a long way.

As a business leader, I constantly remind myself of two things: Don’t make rash decisions, but don’t stay in your comfort zone. Here are three ways to prepare yourself to take business risks and mitigate the uncertainties around them.?

Evaluate Risk Versus Reward

This is a big one. During the pandemic, Freeman faced more uncertainties than ever before: how could an events company survive in a world where no events were being held in person? My team stepped up to the challenge, evaluated viable options and determined that the most effective course of action was to fast track Freeman’s digital transformation. Despite our decreasing revenue, we invested in tools and training for a digital transformation that would prepare us to redefine events then and for the future.

We had to act quickly and evaluate?the risk. What would happen if we invested in our digital transformation and couldn’t pull it off? We’d lose money — probably a lot of it. But, during this bleak time period, we were losing money anyway, with no end in sight. The reward? Our digital transformation could succeed, and we’d turn our numbers around by reaching customers in the digital space. That’s exactly what happened.

Identify those Scary “What If” Questions

My mentors always encouraged me to “work the problem.” Imagine everything that could go wrong, write it down and then solve for it. Answer every objection, every question. That’s how I lead teams. By breaking down the problems, as a team we can identify solutions and address and mitigate risk. The pandemic identified a lot of problems that could have been paralyzing; this process helped us to be resilient.

Make a Contingency Plan

“Look before you leap” is solid advice. High wire circus performers have nets below them for a reason. Figure out the plan to put in place to mitigate the repercussions of a decision that doesn’t pan out the way you’d hoped. Maybe you’ve been working for an auto repair company for 10 years and are confident you could run your own successful shop. By making a contingency plan, such as saving up enough money to survive, you’ll have a safety net.

Everything is scarier before you actually do it. Worst case scenarios are exactly that. They manifest in your mind and disappear once you take action, fully-prepared to take on any of the resulting challenges. How do you mitigate and manage risk?