Not sure about you but when I take a risk the music seems to stop and major focus happens. Before engaging I do the “Life Math” and will use all and whatever time I need within the given parameters (we always hope it isn’t a decision needed in an instant.)
If you are going to take a risk, it is important to know all the nuances of risk…wouldn’t you think? No matter whether it is in our personal or work life, family or social…risk is, well, serious business. If you are looking to: grow in this area of risk knowledge or learn something new or be reminded about something you need to be doing again, here are 15 helpful elements to consider if we are going to take risks, let’s be smart about it. Knowing the elements that make up risk as a concept will help us be more considerate when making decisions.
1. Risk Assessment: The evaluation of potential risks to determine their potential impact and likelihood, aiding in decision-making.
2. Risk Tolerance: The level of risk an individual or organization is willing to endure.
3. Mitigation: Strategies and actions taken to reduce the severity or likelihood of a potential risk, minimizing its impact if it occurs.
4. Risk Management: The process of identifying, assessing, and mitigating potential risks to achieve desired objectives.
5. Probability: The chances of an event or similar or outcome occurring, often conveyed as a percentage or a fraction.
6. Financial Risk: The possibility for financial shortfall due to causes such as market vacillations, credit defaulting, or currency fluctuations.
7. Operational Risk: Risks rising from inside processes, people, systems, or outside events that can interrupt an organization's regular functions.
8. Uncertainty: The lack of complete understanding or certainty regarding an event's consequence or its correlated odds.
9. Danger: A prospective source of damage or adverse outcome, which may be organic, high-tech, or human-induced.
10. Contingency Planning: Creating alternative strategies to address impending risks and doubts, volatility, while ensuring organizational stability.
11. Risk Communication: The process of effectively conveying information about potential risks to stakeholders, ensuring they are well-informed and able to make informed decisions.
12. Reputation Risk: The prospective damage to an organization's reputation due to negative public opinion, often resulting from occurrences like scandals, product recalls, or ethical failures.
13. Systemic Risk: Dangers that can trigger extensive disturbances within a system, industry, or even an entire economy, typically stemming from interrelation and interdependences.
14. Risk Appetite: The amount of risk an entity is willing to accept in pursuit of its objectives, balancing potential rewards and potential losses.
15. Crisis Management: The process of handling and responding to unforeseen events or emergencies that pose a significant risk to an organization's reputation, operations, or viability.
What other factors are a part of your decision making when you are considering risk? Getting more comfortable talking about the subject makes it easier for people to buy into the mentality that “everyone is a risk manager.” We can’t have just one and we need someone to cover our back, like we cover others. When everyone is more knowledgeable and able to think about risk up front, all boats rise and the music sounds niiiiice.
Much love and wishing you all the best!
Dave
Comments