Tag Archives : active risk management

The sense of freedom in a start-up (or incubation) environment is incredibly exciting. However, it is very easy to let this freedom lead you down the path of “what if”, distracting you from achieving success. You only have – at most – three years (many would argue two) to go from spending the “first opportunity dollar” to demonstrating commercial success. This leaves little room for distraction. Over many successes and failures, I found three things separated ventures that went on to commercial success from those that simply remained “interesting ideas.”

When using Active Risk Management (ARM) it is very easy to spend TOO much time and attention managing risks. By using the Pareto Principle to prioritize how you response to identified risks, you can assure your risk management efforts yield more benefit than they cost—in a simple, easy-to-understand manner…

There are four different techniques to manage identified risks. Some try to prevent them from occurring; others deal with the consequences if they do occur. Too few people realize that they have this many tools at their disposal. As a result they do not manage risk as effectively as they would like…

It is very easy to get so caught up in analysis paralysis that you never get around to actually responding to your identified risks. Estimating them instead provides a quick, low-cost way to figure out how big each of your risks are relative to each other. Risk estimation is easy when you remember that risk consists of two components: impact and probability—each of which has a simple proxy for quick estimation…

To actively manage risk across your enterprise, you will need develop an organization-wide consistent method to seeking out and identify risk. This requires two critical steps: 1) develop a clear definition of risk enterprise-wide and 2) teach your staff to seek out and plan for all types of risk: positive, negative, internal and external. Once you do this, you will be ready to begin planning for and managing response to nearly any situation of importance that is likely to occur…

Before any organization can begin to actively manage risk, it must first change its culture to one that openly and freely discusses risk at all levels. This is not easy. It requires commitments from management and staff at all levels. However, it will pay off in many ways: higher trust, increased respect and better results…