The Real Risk of Risks

The Real Risk of Risks

For consultants and their clients, it’s helpful to try to get a grip on risk, since the “fear of fear” is driving people into bunkers these days. (Did YOU know that the stock market is up about 30% since its March low point? How could you, no one talks about it much!)

Here are some criteria to decide if risk is real or imagined (or pandemic) for you and your clients:

• What is the source? Has the source been accurate more than it’s been inaccurate?
• Separate probability and seriousness. It’s probable I’ll slip on ice in the winter, but the seriousness is always minor. It’s improbable that a plane will crash, but the seriousness is catastrophic.
• Use a “risk/reward” ratio (I’ve written about this in several of my books). What is the relative reward vs. the relative risk? Does the former outweigh the latter by a significant factor?
• Can you reduce the probability or mitigate the seriousness (preventive and/or contingent actions)?
• How many assumptions went into the risk assessment? (The more assumptions it will happen, the less likely it is.)
• Does it really affect you directly? Does it even affect you indirectly?
• Is the potential loss tangible, or merely ego-based?

You get the idea. Don’t allow yourself or others to crawl into burrows because the world is a dangerous place. We get up every morning on a hunk of rock traveling at 85,000 MPH around an unstable, exploding star.

If you can live with that, and you must, you can live with just about anything, if you choose.

© Alan Weiss 2009. All rights reserved.