Thomas M. Bragg on Business Risk Management

If you’ve been keeping score at home, you know that the risk management process has three basic steps – 1) identify risks and opportunities, 2) evaluate the risks and opportunities and 3) plan for risks and opportunities. However, there is some work that needs to happen before you get into the nuts and bolts of managing your risks.

.

This week let’s talk about what needs to happen before the process begins. There are some basic activities: inspiration, motivation and preparation. Over the last few months I’ve written several posts dealing with the “pre-activities”. Let’s take a look at each of them. Read the rest of this entry »

Image by UnstablePixel via Flickr

It was a lightbulb moment. A few weeks back, a friend and I were talking about  the tendency of some companies to analyze and hold meetings, hold meetings and analyze, discuss, research and discuss again without taking any action. We were interested in the root cause of the perpetual analysis (a.k.a. analysis paralysis). Was it an extreme desire for precision and perfection? Or was it a fear of making mistakes? Read the rest of this entry »

In my opinion, few business people recognize that risk has a very real (and substantial) value. The lack of recognition is understandable – it’s hard to put a convincing numerical value on a risk that may or may not occur. But every now and then, an event comes along that provides a quantified glimpse of risk’s value. I was a witness to one of those rare events. Here’s the story… Read the rest of this entry »

Here’s a Quiz For You

What do these decisions have in common?

• Is it wise for me to invest in new equipment for my business?
• Should I respond to the irate customer’s email or just let it go?
• Is the best route turning left, turning right or going straight?
• Should I have beef or chicken for dinner tonight?
• Should I wear the blue shirt or the green shirt today?

.

Give up? 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 »

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 »

In our last conversation about risk management how-to’s, we finished up the discussion on evaluating risks. If you are able to utilize some sort of financial model to estimate risk impacts during your evaluation, you now have a rather lengthy list of risks with their probable impacts. That list can now be sorted.

.

How you sort the data depends on your desired approach. You can sort the data in order of probable impact. (This sort order will put the risks with the greatest potential impact to your business at the top of the list.) Or you can sort the data in order of probability of occurrence. (This sort order will put the risks that are most likely to occur at the top of the list.) Each sort order has its benefits. Personally, I look at the data in both ways. I obviously want to deal with the biggest impact risks. But I also want to deal with the most probable risks. Call it selfish, but I like the idea of reducing my future stress levels by eliminating the most probable risks.

.

So we’ve got a sorted list of risks. It’s probably somewhat overwhelming. There is no way you can deal with all of them. Where do you start? Which risks do you work on and which do you leave alone? That’s where the 80-20 rule comes in… Read the rest of this entry »

If you will allow me to indulge, I’d like to depart a bit from my focus on business risk management. Risk management isn’t limited to business. What types of risk do you face in your personal life? In November I wrote a post titled “3 Categories of Risk“. I should have been a little more specific. In that post I was talking about categories of business risk. But what about personal risk? Here are some general categories that come to mind, in no particular order…

.

Read the rest of this entry »