While there’s no silver bullet when it comes to risk assessment and risk management, there are indeed some pointers one can take into account in their approach to managing risk. I’m going to get into a bit more detail about it, but generally as a rule of thumb it’s a matter of breaking it down to what you have to lose and what you have to gain.
If what you have to gain is a greater reward than what you have to lose then the risk is probably worth taking. That’s an over-simplified way of putting it though, but that’s precisely the reason why it’s worth getting into more detail on.
What you stand to gain
Nobody just takes a risk for the sake of it, unless you’re intoxicated or something like that, in which case it comes into view exactly what risks are worth taking and which ones aren’t. Either way, a risk to be possibly taken stems from an opportunity to gain something. It’s what you stand to gain which is brought into focus first and then the associated risk comes to the fore, but sometimes it can work the other way around.
Generally you should evaluate what you stand to gain by taking a look at it from the point of view of your existing intent and also taking into account the greed factor. Greed can really do a number on you and limit your ability to make clear-minded decisions, so it’s best to define exactly what would constitute greed long before you’re put in a situation in which you need to make a decision about whether or not to go ahead and take a particular risk.
Naturally this is not so easy, but if we’re talking about a business setup then you should be guided by your original mission statement and vision.
What you stand to lose
The bigger the risk, the bigger the reward – that’s an age-old cliché which rings true through the ages and one which should be taken into account when you gauge exactly what it is which you stand to lose. It’s as simple as this really – is whatever you stand to lose going to set you back should you actually go on to lose it? If so, by how much is going to set you back and will you be able to recover from that setback?
Outsourcing the risk
The best way to manage any risk in a business or in any other setting for that matter is to outsource it. A simple example is hiring a car if you’re going to be going on a cross country road-trip so that you don’t risk doing any damage to your own car, or perhaps something like looking towards payday loans and then factoring those into your company to perhaps steady a sinking ship as a selection of some much-needed director’s loans.
Either way, when it comes to risk assessment and risk management, what’s important is to clearly establish the boundaries which define what you stand to lose and what you stand to gain, and what you’re willing to lose in pursuit of what you stand to gain.