How to Identify and Manage Risk in Your Business

By January 26, 2016Self Development

There are more things, Lucilius, likely to frighten us than there are to crush us; we suffer more often in imagination than in reality. – Seneca

What is the worst thing that will actually happen if you fail? Whatever it is you’re trying to do, No matter how big or small. So often the thing that holds us back is an exaggerated and for the most part, entirely imaginary sense of the results of failure.

Thoughts like:

  • I’ll have no money.
  • I won’t be able to pay my mortgage/rent.
  • I won’t be able to keep up my car repayments.
  • I won’t be able to update my wardrobe.
  • I can’t afford to send my children to school/club/event etc.

And no-doubt many more, float through the mind like dark clouds – promising stormy weather to follow.

For me, such thinking is likely to be intermingled with feelings of shame and embarrassment. Of having tried and failed. Of not being quite able to cut it. Of not being good enough.

But how is it in reality? Has the event that you so fear actually come to pass? If it hasn’t, then why are you devoting so much time and energy to thinking about it?

And even if it did – would it really be so bad? Bad enough to prevent you from trying in the first place?

If the fears are actually justified – the thing to do with them is to figure out how to offset the risk of them occurring in the first place. And then to mitigate the results if they were to happen. Carrying out a Risk Analysis may sound a bit corporate, but if it helps you to sleep at night – it’s worth the effort, right?

  1. Try out the following steps for starters:
  2. Figure out where the likely threats to your business are. Are they internal (within your control) or external (outside of your control)?
  3. Try to carry out some kind of assessment as to how likely they are to happen. Grade them from Very Likely to Extremely Unlikely accordingly.
  4. Now try to identify how you can deal with those threats, should they become a reality, in priority order.

Once you’ve gone through that process, you’ll probably come to realise that things are nowhere near as bad as you might have thought. And that for almost every eventuality, there will be some kind of mitigating action that you can take to offset the worst effects.

Of course, it’s quite possible that at some point – the worst may yet come to pass. In which case, you might want to follow some of Seneca The Younger’s advice. Being that on a regular basis, you should set aside a few days to eat the most basic of diet and live the most frugal of lifestyles. Pretend for a day or a couple of days each month that you don’t have any money. That you weren’t able to live in a nice house, with a nice car and a fancy wardrobe.

And then ask yourself: “Is this the thing which I so feared?”

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