We manage risk. Do we seize enough opportunities?
- By Gareth Byatt
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- 27 Feb, 2019
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ISO 31000:2018 defines risk as “the impact of uncertainty on objectives”.
Uncertainty can result in upsides and downsides, yet most people think of risk as the chance or impact of something negative occurring. Whether it is financial risk, safety risk or production/operational risk, mention this word to someone and the chances are they will think of downsides, problems and negative potential outcomes.
Clearly, there are many (negative) threats that we need to identify, evaluate and manage on an ongoing basis. Yet there are also many opportunities we should seek to seize and capture. Perhaps opportunities are seen as “the reason why we are in business”. Risk teams can help people to ensure their opportunities are fully realised. Perhaps a performance metric that a Risk team can use is: are we doing enough to materially help the people we work with to seize opportunities?
There are many examples where risks can be realised as opportunities, including:
1. Hold meaningful and thought-provoking discussions about risk appetite to seek the right types of opportunities that match what your organisation stands for.
2. In Risk workshops, make sure you spend enough time looking at how to make opportunities happen; don’t just focus on negative threats (unless the workshop is specifically required to focus only on the negatives).
3. When you help people make risk-informed decisions, look at ways to seize opportunities as well as how to manage threats.
4. When you talk about chances (probabilities) of success / succeeding with a target, describe them as having “between a 50 and 70% probability of success” rather than “a 30 to 50% chance of failure”.
Can you turn a threat into an opportunity? Sometimes. The next threat you face, think about whether, if you changed your approach, it could be turned into an opportunity. It’s not always possible, but it’s possible more often than you might think.
In this 30-minute YouTube clip, independent Risk Consultant Alex Sidorenko interviews Hans Læssøe, a fellow independent Risk Consultant and former Senior Risk Director of LEGO, and discusses how to understand and thrive on uncertainty. It includes some guidance from Hans on seizing opportunities (which includes understanding your risk tolerance and appetite to ensure you leverage your opportunities fully).
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