Everyone in an organization needs to strive to minimize risk at all levels. As a leader, though, you are ultimately charged with identifying risk factors, assessing their likelihood, and putting into place a plan to mitigate any impact on the business. The organization, your team members, and your family depend on you to carry out this important responsibility.
Risk comes in many forms—financial, customer, supplier, employee, regulatory, environmental, litigation, leadership, technology, and on and on. It permeates everything you do within your company. By properly managing risks, you will reduce the impact on your organization if a risk factor comes to fruition.
Here is a basic road map to fulfill your responsibility:
- Understand that as a leader, you are ultimately responsible but you do not have to do the heavy lifting. Your managers should be assessing risk factors within their functional areas.
- Have strategy sessions with your team to discuss areas of risk—what can go wrong, how it might impact your business, and what actions you need to take to minimize the impact. A leader’s job is to ask probing, thought provoking questions that advance the discussions to an effective conclusion.
- Meet with external confidants —board members, industry executives, your accountant, insurance broker, attorney, friends, etc. — to discuss their perspectives on risk.
- Develop and implement a plan that encompasses your conclusions.
Don’t ignore difficult decisions hoping something won’t happen! Be forward thinking. Reducing risk is important to not only help your business succeed, but also to maximize its value. A buyer will evaluate risk—you need to do it too.
Too few leaders spend time on the topic of risk management. What are your thoughts? Share in the comments.