Thomas M. Bragg on Business Risk Management

If you will allow me to indulge, I want to take a step away from the uber-tight focus on risk management for a minute. I was on a tele-conference today. During the conversation I shared that my dream is for my company to evolve into a “sales organization” that does engineering services rather than an “engineering organization” that does sales.

.

On the other end of the call, Paul asked me what I meant. I’ve been thinking about the topic ever since and I’d like to share my thoughts with you. The distinction isn’t limited to only engineering services companies. It applies to every type of business out there. Read the rest of this entry »

To be honest, I’ve debated about whether I should write about financial modeling. If you’re anything like my girlfriend Amy, the mere thought of financial modeling causes great anxiety and a profound desire to change the topic. And I’m pretty sure that a post on creating spreadsheet representations of your business may not go viral.

.

But the simple truth is that financial models are incredibly powerful tools and they’re not that hard to create. Models are also required to do certain types of risk evaluation (as I talk about here, here and here..) In fact, models of the financial kind can be kind of sexy – at least to the engineering types like me.

.

Well, now that I think about it the models really aren’t that sexy…did I mention that financial models are incredibly powerful? Read the rest of this entry »

Let’s drill down a bit into risk evaluation – step 2 in the risk management process. It’s standard practice to evaluate a risk or opportunity’s impact and rank it. You can rank the impact on a scale of 1 to 5, with 5 being the highest impact. Or you can rank the impact “high”, “medium”, or “low”. Or if you’re utilizing financial models you can calculate the risk’s impact and represent it in terms of your local currency.

.

Seems very straight forward, right? It is, but let’s take a step back and ask “Impact on what?” Read the rest of this entry »

My girlfriend Amy has a home-based, small business, working as a professional wedding and portrait photographer (one of the best in my very-biased opinion, but check out her site and judge for yourself.) I work with Amy as a PT photographer on weekends and also help her out on the business side of things. As I’ve learned the in’s and out’s of a home-based, single person business, I’ve been paying attention to its similarities and differences in terms of risk management. Read the rest of this entry »

It’s been difficult to come up with topics this week.  The situation in Haiti seems to consume the majority of my thoughts when I’m outside the office. Make a difference. Please donate cash to the relief agency of your choice.

.

I thought I’d take a look at my Google Analytics page and see what people are searching for when they find my website. There is a definite trend. Many of the searches involve the word “example” or are geared toward identifying potential risks for businesses. Let’s talk about that… Read the rest of this entry »

Over the weekend I ran across a tweet that got me thinking:

You must risk something to succeed. Where there is no risk, there is no chance of success.

The tweet originated with Steve Keating (@LeadToday). It inspired me. The message applies to so many facets of life. Let me explain… Read the rest of this entry »

Over the last couple of months, I’ve walked through the process for small business risk management with you. I thought it would be a good idea to capture all of the “how to” posts in one place.

.

Take a look at the compilation. My hope is that after reading all the posts below you have a general understanding of how to manage risks and opportunities for your small business. More importantly, I hope you see the benefit of incorporating formalized risk management into your daily business life.

Read the rest of this entry »

It’s been a while… Let’s get back to basics of the risk management process.

.

We’ve covered the first two steps – identifying risks and evaluating them. You now have a great list of your risks and opportunities, in order of their potential impact on your business, but your work isn’t done yet. Having the list helps you anticipate which risk may have the biggest impact on your business, but if the risk becomes reality you will still be reacting to it during a potentially stressful situation.

 .

Since clear, thoughtful thinking is difficult during a crisis, let’s do some thinking now about what we would do. This exercise is called risk mitigation planning. Believe it or not, this is the fun part of risk management. Read the rest of this entry »

Let’s take a step back for a minute. Step one of the risk management process is “Identify your risks”. Three little words so it must be pretty easy, right? Not really.

.

A risk management plan is only as good as the risks you identify. They need to be specific. They need to be the ‘root risks’ or the root causes of those potential hazards (or opportunities, remember) facing your business. As you start drilling down into all of your assumptions you’ll find that it is hard to get deep enough. It’s hard to go far enough down into the details without getting derailed on meaningless tangents.

.

To help out the process, I’ve developed a technique I call the “5 Coulds”. I can’t claim this technique as original work. It’s based on a root cause analysis technique called the “5 Whys” that is used in process improvement and the Toyota Production System. Read the rest of this entry »

It’s the last week of 2009 and I owe you a blog post. I know I’ve promised that I will run through the third step of the risk management process – planning for risks – but I want to hold on to that topic until things are back to normal after the holidays. Stay tuned. In the meantime, let’s talk about risk management and small businesses…

.

In a recent comment on a Professor Pinch post, I listed three reasons that small businesses don’t practice formalized risk management. In my opinion, small business owners either:

.

1. Recognize the need for risk management but choose to ignore it; or
2. Recognize the need for risk management but assign it a low priority; or
3. Don’t recognize the need.

.

I’m sure there are some examples of each reason out there in the world of small business, but which one is the primary reason? Read the rest of this entry »