Risk Assessment: When is Risk OK?
Formalizing processes to manage risk is an important part of leadership. As a skilled Mongoose-type leader you want to know if the risk is an isolated or serious problem or a potential reoccurring issue. In order to determine that you need to wait for a complete picture to emerge that will reflect more information about potential delays, costs and/or losses. Then, once the information has been analyzed, you can make an appropriate, weighted and informed decision can be made in light of recommendations from all affected parties.
Risk-taking leaders face many different kinds of risk including their own decision-making and they often tend to treat their risks as though they were in a separate silo and weren’t going to affect the team or the organization. As a result some tend to over-manage some risks while not paying enough attention to others. For that reason a clear and well documented management plan is a must, and whatever level of risk management, change management or similar process you have in place, it is your responsibility to:
- Clearly understand the organization’s appetite for risk and ensure that team objectives reflect that appetite.
- Identify potential risks both internally and externally and assess the level of risk associated with each risk scenario.
- Develop and implement a pro-active plan to address the potential risks that incorporates and implements control policies and procedures to manage or mitigate the risk.
- Gather information and communicate it to the appropriate parties in time for them to fulfill their risk management responsibilities and continually monitor and make adjustments as needed to keep the risk management program current and relevant.
It all comes down to how you manage the decisions you make.