What’s risk and why do I want to manage it?

I figured a good place to begin this journey is with a discussion of what’s risk and why are we talking about it? In the daily routine of running a business and making a living managing cash flow, making payroll, meeting customer deadlines, and generating new business all usually take precedence over risk.  And everyone feels like they have a good handle on managing "the important risk" (put locks on the doors, secure valuables, make sure good lighting is available for safety and security.  But do you know what you don't know?  Are you aware of and do you have a plan for managing the seemingly inconsequential task or event that can have an impactful effect on your business? 

By one definition, the process of controlling risk is risk management: “The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future events.”  http://www.businessdictionary.com/definition/risk-management.html

I like this definition provided by Business Dictionary website because it not only includes the concept but also the process in the definition.  The basic process consists of six simple steps:

1.       Identify

2.       Analyze

3.       Prioritize

4.       Control

5.       Measure

6.       Adjust

September 11, 2001, changed the way many of us look at risk and the ways it can impact our businesses and our lives. It became seemingly clear that it does not really matter the size of your organization, there is risk present every day that can affect your ability to reach your organizational goals.  Accept and embrace this fact by identifying the risks, analyzing and prioritizing the risk, then controlling the risk through a number of different risk strategies (or combination of risk strategies). 

I understand you don't have time to do all of this and run your business as well.  Not to fear, there is help out there and, in some cases, it is closer and more economical than you might think.  In my next post, I will introduce you to the different players (some you already know and some you may not). 

Until next time, stay safe and be kind to one another.