Every change brings with it uncertainty. Innovation is even more uncertain than other businesses. You have no certainty that what you are planning will get any benefit. Perhaps you are confident. Maybe you are optimistic about the world by nature. Or perhaps you feel that this time you have a nose. It is not enough. There will always be someone shouting: “It’s too risky, we can’t do this project!”. As most people don’t like to take risks, opponents’ coalition will grow in strength. But you can shut their mouths without any problem. You have to prepare yourself.
As a founder, you may find it challenging to identify any risks of your project. You believe in it, and all you think about is when to start working on it. The sooner you discover the threats that may appear on your way, the easier it will overcome them. Using appropriate techniques, you will prepare yourself in advance for what may happen. And what is more, you will have a solution for every eventuality.
Risk management strategy
The risk can have both negative and positive effects. As it involves a high degree of uncertainty, your organization must expect developments. And be able to manage risk. What strategy your company adopts is not essential. It is crucial that the mechanisms you use to identify, assess, and communicate risks. This approach will also enable you to plan risks, choose the right responses, and track them. It is worth setting specific standards across the organization. And identify the people responsible for following them. In this way, you will always know who handles what and to whom you should report risks.
Areas of risk
The risk may occur at the least expected moment. Even if you are well prepared for it, you may miss something. It is worth being aware of what may happen to you along the way. Depending on the stage you are at, you may run into problems in the following areas:
- The concept phase: Can you identify clear goals of the project and measure them? Do you know the work priorities in your organization? Do you analyze the market? Is your idea legal? How do you want to finance it? Do you identify customer requirements well? Is your concept relevant?
- Initiation phase: Do you know the project budget? Will other work not affect the schedule? Have the deadlines been well estimated? Have the acceptance criteria been clarified? Do you know what your role is in the project? Do other team members know their responsibilities? Does everyone have access to project documents? Have all functions been described?
- Implementation phase: Will there be no conflicts in the team? Will all necessary resources be available? Will some problems force a change of concept? Will you manage to maintain quality? Will there be no changes in the team? Will there be no problem with financial flows?
- Completion phase: Will the changes introduced during the project have an impact on its reception? Is the product safe? Will there be no problem with using the product? Have all project goals been achieved?
These are some of the problems you may encounter along the way. Perhaps your industry is specific and will have its risk elements unprecedented in other areas. You need to be aware that the risks may arise at any time. The earlier you identify them, the easier it will be for you to convince other people who can overcome the problems. When you show others your idea, you must have answers to various questions about risk. In this way, you will put all arguments out of their hands.
The strategy sets out a philosophy in risk management. The tools allow us to deal with them in practical situations. Some of them are universal. It is worth having an idea of some of the most popular ones:
- SWOT analysis: a simple tool used in many companies. It allows us to identify weaknesses and threats resulting from the environment.
- Checklists: a very simple and effective technique. Once created, a list of questions to be answered in each project will determine the risk. The lists can be divided into smaller sections to have a broader idea of what types of threats you identified and their significance.
- Risk matrix: a tool for prior risk identification. You can put individual elements in a single table, which presents the probability of risk occurrence and its impact on the project.
- Decision tree: this method allows you to analyze different variants of the project implementation. And choose the optimal path, and answer whether a given project is worth realizing.
Risk management process improvement
You may find that the tools you use are useful, but they do not work 100% in your organization. From time to time, use different methods and check which combinations work best together. It is also worth developing a model of risk management practices and disseminating it to other employees.
Learning should come not only from failures but also from successful projects. In each of them, there are likely to be unforeseen problems. Track such situations and use the knowledge gained in other undertakings. The reward system can award employees to share their experiences and encourage them to think about the problems that may arise on their way.
Risk is an indispensable part of your life. It would be best if you learned how to deal with it. Many companies do not like to take too tentative steps. It is because people who work there are afraid to take them. When analyzing risks, it is worth asking yourself: do you risk more by doing nothing or deciding to install an innovative idea? You will find the answer to that in this entry. Remember one more thing. The greater the risk, the greater the benefits. Those who do not risk will never drink champagne.