Most of the entrepreneurs I work with fall into one of two camps – either they used to be involved in risk management in their former corporate life and have put all of that behind them and never want to go back, or they have come into business from an artistic or spiritual background, have no idea what risk management is and really don’t want to know. Which are you? Will you stay with me as I take a little journey into this uncertainty and show you it doesn’t have to be dreary, or scary?
What is risk?
The old paradigm definition of risk is found in practically every dictionary you consult – risk is exposure to danger, to damage, loss or harm. It is a threat.
However, modern risk management generally defines risk as any area of uncertainty – and that does not necessarily equate to something bad. A risk can be a positive opportunity, or a negative threat, or it can be both.
Even when a risk is a threat, it does not have to be seen as something that can derail you. It is simply an indication that you need to recalibrate, to check that your values and vision are in line with your work and your environment, and to make choices about how to embrace the threat in a positive manner through action.
Negative and Positive, Threat and Opportunity
We can see, therefore, that risk management looks at threats, but it also looks at opportunities – both can be areas of uncertainty that may (or may not) need immediate action or an action plan.
A common negative risk might be something as simple as “what if I catch a cold?” The likelihood of the risk occurring will be unique to you (are you prone to seasonal illness? do you have kids at school who bring the germs home? etc). The severity or importance of the consequences will also be unique to you (are you hands-on and will you pass illness on to your clients? are you entirely online and can just soldier on?)
An example of a positive risk might be “what if hubby suggests we go away for a week?” How will that impact your business? Is it set up to survive so you can say a wholehearted “YES” to that opportunity?
How many of you are sweeping this post under the carpet right now thinking “Ugh, I just don’t want to think about that. I’ll deal with it when it happens.” You may have a high tolerance for that risk.
Entrepreneurs tend to have a high tolerance for risk in general, and to be more likely to see risk as opportunity rather than threat – it’s how we roll… By increasing our awareness of the uncertainties (positive and negative) in our business we maximise the likelihood of our being able to take advantage of opportunities and minimise the likelihood that a threat will bite us on the backside.
Why is risk management a dirty word?
We naturally resist thinking about risk because it can make us feel uncomfortable and overwhelmed.
This tactic of avoidance puts us in the position of REACTING to threats and opportunities in the moment – which can often mean a lot of unnecessary flap as we scramble to identify, assess and respond all at once – and by the time we process what is happening, the opportunity may have passed or the threat may have eventuated and we are stuck feeling regretful, mopping up and picking up the pieces.
I totally get the appeal of dancing in the chaos, taking each moment as it comes. I have done that for years and in many areas, I will continue to do so – but they will be areas where I have consciously chosen to allow the chaos to continue.
The older I get, the more I crave serenity – the peace of knowing that I don’t even have to think about my what-if? worry list because I have mapped it out, externalised it, it is out of my head and onto paper and all it takes is a quick review every couple of months to update it.
I guess that is the crux of this blog – entrepreneurial risk management is important because it shifts the uncertainty out of your head making more room for peace of mind. It stops little mind chirping “Awoooga, awoooga, awoooga” and helps big mind answer “It’s ok. I love you. We are safe. Be still.”
Risk management transformed
When I talk about risk management, I mean something a bit different from those who work with the kinds of corporate risk you might be more familiar with.
I am talking about getting really curious about the environment that you operate in. What uncertainties are you sweeping under the carpet? What concerns do you have about things that could potentially derail your business? How strong are your values and vision, and what situations could undermine your commitment to them? Your unique and amazing business needs you to take some time to really turn and face these issues.
Grab those dragons by the tail and haul them out of those dark and spooky subconscious caves. It’s is time to get up close and examine them in the sunlight. Are they limiting beliefs that you can just bless and let fly away… or are they real world dangers prompting you to take action?
If they need action, how urgent is it? Can you safely send them back to the cave with a plan for when and how you will deal with them or do you need to prioritise this NOW?
Once you have made those personal decisions about which of these uncertainties can safely be ignored, which need to be consciously watched and which need immediate action, you are in a much better place to develop and implement an action plan.
Which sounds better for your business? Living with suppressed fear or actively managing known and controlled risks.
It is this kind of active risk management system that takes all of the guesswork out of sustainability.
How I can help
If you would like to talk more about how I can help you identify and manage the unique risks of your business, book a free 30 minute consultation or check out Castle Quest, my signature risk management program for small business owners.