Risk is one of those concepts that appears to be difficult to pin down. We all seem to have a different take on it, and our attitudes can change depending on what’s at risk. We’re in business, so we deal with risk every day, and we know how that can sometimes be both invigorating and worrisome, all at the same time.
Our Government is encouraging people from all walks of life to look for the “Business in You”. So for many people, they’re being encouraged to take a big step into the unknown. Into a world of risk.
I listened to Professor Stephen Diacon from the University of Nottingham give a very lively presentation a few days ago, about ‘Managing Risk in SMEs’. It was part of the Ingenuity Breakfast Knowledge Exchange programme which stimulates the mind while feeding the body. Good networking, too.
Stephen points to psychology research that suggests that people respond to risk in an unbalanced emotional way: disproportionate fear of adverse consequences and of their ‘unknown’ nature. He goes on to talk about executives using ‘defence mechanisms’ to suppress the unbalanced emotional response, but these themselves can lead to even worse problems, such as over-confidence, fatalism, denial or grandiosity. In the end the defence mechanisms themselves can lead to business failure and worse. Not an encouraging environment for new business owners, but one in which many of us find ourselves every day and deal with appropriately.
So, how do you deal with risk in your business and your planning? What would you advise people coming new to business about how to manage the risks that they will encounter? Your own business; is it worth the risk?