Join us at SmallBusinessBigChallenge.com
Too often, young entrepreneurs have a limited concept of risks and rarely know the process to mitigate them. They often just disregard them which is definitely the worst approach! For example, there is an estimated 40% of businesses that have no insurance whatsoever!
Today, we will go back to the definition of risk and expand on it! We will also learn how to create a good risk management plan.
To help you create your plan, download the companion file which includes a template
Here is the 6-step process to manage risks:
1- Objective at risk (goal/ what are you trying to achieve? Being successful = use your mission statement)
2- Identify the risks:
= what could hinder or help me achieve my goal?
= understanding uncertainties in the right context and environment.
3- Assess risks and prioritize them (what is the probability and severity of impact? And which risks are the most important?
4- Create a risk management plan: (What can be done to increase opportunities and decrease threats?)
5- Execute the plan
6- Monitor & Review (did it work, if not what else can we do? / Are risks different today?)
4 ways to act on a risk:
· You can eliminate the risk = eliminate the uncertainty = Avoid threat / Exploit the opportunity
(ex: skydiving)
· Transfer or share the risk = threat (insurance, contract manufacturing)
Opportunities (partnership, joined venture)
· Reduce/mitigate the risk = lower probability or severity of impact
ex: sprinkler system (lower impact)
Ex: safety training = lower probability
· Accept the risk = include it in the baseline and create a plan B.
ex: If my webserver fails, my website will be down until I fix it. Plan B: I will get a backup server.
Other key concepts:
Risks are natural and everywhere, but we have the ability to managethem!
Risks are “All uncertainty that matters” not just threats
Some risks might keep us awake at night, but risks are also the opportunities that make us get out of bed in the morning!
To see the Video version: https://youtu.be/S7WRrCpszk8
Send in a voice message: https://anchor.fm/smallbusinessbigchallenge/message