Risk, what does it mean?
For some, it is crossing the street. For others, it is starting a company with the last of their own money, or money from an expectant and hopeful investor.
But, what does it mean for companies/customers? Ultimately, I think it drives everything at a company. For some companies, often publicly traded, risk is not an option. Everything they do must have a strong business case to produce more revenue with little or no risk. Smaller companies tend to be much more willing to take risks. Sometimes it’s the only way to get the growth they so desperately want and need. In between you’ll find many companies along the willing-to-take-on-risk spectrum.
So, how do you convince your company or customer to take a risk?
One way is to downplay the risk. Not a good idea. It can, and likely will, bite you in the end. No, you must address risk head on. You must out weigh the risk with the potential benefits. Show examples of success. Find and present metrics from those that have gone before you. Show the potential benefit the customer/company can recognize if they accept the proposed risk. Even after all that, you may only open the door to considering an improvement project. It does not guarantee a person or company will proceed.
Once you show the benefits you must address the risk.
Address the risk head on. Show how you, or your company, will mitigate risk throughout the venture. Always keep in mind the customer’s or your company’sâ€‹ view on risk. It could be as simple as a loss of the investment into a project. On the other end of the spectrum could be lost customers, lost revenue, or even lost jobs. By not dismissing the risk, but acknowledging it and trying to prevent it, it shows your commitment to the customer, whether internal or external. It shows you are a partner, not just someone trying to sell an idea and run.
In the end, everyone wants to grow. Very few want to take the risks needed to grow. If you’re trying to help yourâ€‹ customer or company grow and improve, you must prove you will do everything possible to manage risk, but not dismiss its existence in the first place.
Are you in the process of accepting risk in order to improve, grow, or move in a new direction? We offer many solutions that can help mitigate risk — solutions and services with proven track records that adhere to best practices. We also offer a Product Development System Assessment (PDSA) and Functional Group Assessment (FGA) to help align organizations, define strategic direction, and help map the best course forward. Download our PDSA brochure or FGA brochure to learn more. Please share your experience and thoughts about accepting and managing risk in the comments below.