Risk management: Part 3

Look back at earlier posts on risk management: [Part 1] [Part 2] Part 3

Risk management vs risk avoidance

In some circles, especially in non-commercial sectors, ‘risk management’ is commonly confused with ‘risk avoidance’. And you don’t have to be a genius to realise avoidance and management are not same thing. In fact, avoidance is pretty much the opposite of management.

Why is this a problem?

In these situations, any sort of risk is seen as a valid reason to slow an activity down or stop it completely. Of course all activities involve some level of risk, so organisations that allow this sort of behaviour don’t tend to do much.

What to do about it

If you hear someone using ‘risk management’ as a reason to sit on their hands and avoid taking any action, why not throw in a management buzzword of your own: ‘opportunity cost’.

Opportunity cost is the risk associated with not doing something. It’s the risk of missing the boat. It is the sound of the train leaving the station, and you’re not on it.

This is a great way to separate the genuinely risk averse from the just plain lazy.

Look back at earlier posts on risk management: [Part 1] [Part 2] Part 3

About Jonathan Smith

Turning strategy into reality
This entry was posted in Decreasing costs, Increasing revenue, Positioning for the future, Quality. Bookmark the permalink.

2 Responses to Risk management: Part 3

  1. Pingback: Risk management: Part 1 | Jonathan Smith

  2. Pingback: Risk management: Part 2 | Jonathan Smith

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