Making Better Decisions – Managing Risk In The Business And For The Business Owner

Prioritise

The first thing that you have to do when making any decision is to understand what the possible risks are. Once you know what risks you could be facing, understand those that are most likely to occur, those that may occur, and those that are unlikely to happen, and assess their potential impact. When you know what you are dealing with you can prioritise solutions and plan how to deal with the risks that are most likely to occur following your decision. Doing this also helps you weigh up what can be dealt with now and what you can leave till later, the greater the risk, the higher priority it should be. 

Dealing With Risk

At hgkc we believe that there are four ways to deal with risk:

• Remove – make sure that you take any action that removes the possibility of risk in the first place.

• Transfer – create an agreement in which you pay another party to take on the responsibility of the risk, e.g. insurance.

• Mitigate – Take every action that you can to reduce the risk.

• Ignore – This is an acceptable way forward, however, it is only advised when there is such a small chance of the risk occuringoccurring or whether the situation is completely out of your control.

Don’t Avoid It

It is quite common for people to just avoid their problems by either only focusing on the positives or leaving it until someone else takes care of it for you. When it comes to decision making and managing risk in business it is key that you don’t put it off. Leaving risks will only make them harder to deal with, and when it comes time to face it, you may not have the tools or the time that you need to handle the risk, which will only detriment your business and people. 

Ignoring the risk would mean that you have to deal with everything at the last minute, we’d recommend do as much as you can to ensure that it is mitigated as soon as possible. For example, when dealing with a delivery for a new project or product, be proactive and talk with the supplier to ensure that they understand how important the delivery date is. We know that risk management can be a stressful process, and procrastination will only limit your options and ultimately the quicker you face the risk, the quicker you’ll be on the other side.

Prevent It

When you face risks regularly in business, you can start to learn what will likely happen. You can then learn how to set up preventative measures so that when the risk happens, you are able to immediately get through it. You will have a range of tools and techniques that you use to mitigate risk and overcome any tricky challenges. Create a plan that incorporates these tools so that you can counter any risk that occurs as soon as it happens. Such measures could include putting aside some money to help cover the cost of any risk. Staying prepared will not only help make the day to day easier but will save your time.

Scenario Planning

Identify all possible scenarios that could occur in the future. Take into account all the risks that you could be facing and make a plan for all of them. hgkc wrote the blog ‘How Thinking About The Future Can Help Businesses Improve Their Resiliency, Even In Times Of Uncertainty’ which looks at scenario planning and the importance of imagining storylines that enable you to workshop strategies and plans to help you face any and all risks.

Have A Backup

An important lesson to learn is you never really know when something may go wrong, even when you have planned for the worst. The future is uncertain, things can appear unexpectedly, and you may not have taken certain risk scenarios into account. This is why it is vital to have a backup plan (and maybe even a backup to your backup plan, just in case!). Don’t think that your plan will work and the measures you have taken will protect you – it is always better to be safe than sorry and having a backup plan, taking into account your people and your customers, will help you in case things go wrong.

Following these few points will ultimately help you when it comes to making your business decisions and managing risk in the future. If you are still struggling and would like some extra advice, get in touch with one of our expert consultants, who are more than happy to help.