What’s to Like about Risk?

Did you know that risks are not always damaging? I’ll admit it, generally a risk has negative connotations, but there are many opportunities to exploit everyday risks and to reap the benefits of being a little bit bolder and braver.  

Be Brave

In finance there is a fine balance between risk and reward. People invest in risky projects because these projects can provide a handsome return. The return on investment of less risky projects will be much smaller but these projects have a much higher chance of success. When it comes to money, you should balance your investments in risky and safe projects. However, when it comes to your life where dignity and confidence are all that will be affected, it is safe to take a more aggressive approach. Be bold. Be brave.

Risk Failure

Failing is a defining point in people’s lives. Successful people view failure as inspiration to do better next time. Making mistakes, incorrectly solving a problem, losing, are simply stepping stones to your paramount goal. Failure is necessary to be the ultimate version of yourself and risking failure is a critical component in achieving this.

Success is stumbling from failure to failure with no loss of enthusiasm.” – Winston Churchill

Risk Choosing The Road Least Travelled

People are like sheep – they tend to follow the rest of the flock. We are told that there are defined paths for us to take which will lead us to some ethereal destination. The black sheep who step off the worn track rely on reaching their destination through intelligence, logic, a pinch of luck, and lots of perseverance. But roads less travelled will reward the journeyman with far greater riches if you can make it.

Risky Business

Looking from a negative point of view, a risk is the chance that a hazard will damage the value of something – often health or wealth. Our lives are filled with hazards from driving to interest rates. Wherever we turn our head, hazards are hiding in plain sight.

In Engineering, risks are analysed through two critical elements – likelihood and consequence. Risks which need action can be found through a matrix which weights their overall effect.

PI Chart

From the matrix, risks with severe consequences must be analysed even if their likelihood is miniscule. Conversely, risks with a strong chance of occurring may be excluded from the risk management plan if they are seen to have virtually no impact. Most risks fall in between these two extremes. Control measures can be proposed and implemented to minimise the chance and impact of risks when they cannot be eliminated.

Frengineer 2017
Advertisements

2 thoughts on “What’s to Like about Risk?

  1. The problem with risk is the swiss cheese effect: if you don’t properly assess the risks and the holes line up, you end up with catastrophic failure.

    Like

    1. That is why successful organisations have a vigorous risk management plan. You can never assume that everything will run smoothly but by creating a risk management plan you are able to minimise loss.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s