Owning a business is a risk. There are so many hurdles to overcome, and so many failures to expect before success slowly appears on the horizon. As a prudent entrepreneur, you would have probably spent many a sleepless night (or long day), making a mental note of all the plausible challenges that you would face in pursuit of your business venture, yet, for all your planning and preparation, something can still (and usually does) go awry. Conversely, sometimes, you take a risk, and, you reap countless rewards.
It therefore begs the question, what really is a risk?
Simply put, a risk is any action or event that can either negatively or positively impact the operations of a business. Mind you, a risk is not a crisis, since, a crisis is the result of negligible risk management. Yet arguably, many of us still tend to think of a risk as a negative enterprise or series of actions which ultimately culminate in failure. Sometimes, that definition proves apt. Nevertheless, a risk doesn’t always have to incur adverse consequences.
Take the example of the current second richest man in the world, American Jeff Bezos, who is the owner of Amazon. Back in the day when online shopping was not quite a prevalent as it is now, Bezos took a (calculated) risk to introduce online retail shopping to consumers, not only in the USA, but also globally. Suffice to say, his calculated risk has reaped tremendous dividends to date, especially in a time of COVID-19, when conventional, in-person shopping is proving to be both physically-risky and time-consuming.
The anecdotal story of Bezos is instructive, as it suggests that, a risk is inextricably linked to how an entrepreneur gauges his or her success. So, you need to do your background research on balancing risk with knowledge of your target demographic. Some of the more common factors that can be applied in making this determination include: (i) our financial investment in the business; (ii) the amount of time we can reasonably invest; (iii) the reputation of the business; and (iv) perceptions of the business by our customer base.
Managing those risks to our benefit, or conversely, neglecting to effectively manage those risks to our detriment, is ultimately what portends as ‘business luck’ or ‘business failure’. Collectively, these actions come under the rubric heading of risk management. Mind you, a risk only lays claim to that name up until the moment that it is identified as a risk. Immediately afterward, it becomes a management issue.
Therefore, the onus is now on the business owner/manager to pinpoint the issues that present themselves as risk, and diligently minimize their adverse effect, or, passionately maximize their positive potential through tactful management. Such recommended management practices include, inter alia, (i) Risk planning; (ii) Risk assessment; (iii) Risk handling; (iv) Risk monitoring; (v) Risk identification; (vi) Risk analysis; (vii) Risk documentation; and most importantly, (viii) stakeholder (both internal and external) feedback.
Effective risk management makes sense. Risky business does not.
Keywords: LinkedIn Local Caribbean, risk management, crisis, failure, success