L’aversion au risque bloque de nouvelles opportunités commerciales. Comment pouvez-vous percer pour saisir la croissance ?

Risk oversight is not necessarily restrictive. The insght from risk analytics can provide critical input on areas that need to be focused to maximise growth

In any business environment, we have to take that calculated risk, understanding the risk and analysing the possible mitigates available. Other way....we can price the risk, higher the rish, higher the cost. Many organisations sitting on high cash level or low leverage but not expanding the balance sheet

Understanding the different types of risks and their impact on your business is crucial. For instance, reputational risk, which is often overlooked, can have long-lasting effects on customer trust and loyalty. Establishing a robust risk assessment framework that includes qualitative measures can provide a more comprehensive view of potential threats and opportunities.

Consider a tech startup launching a new product. Risk management for this company involves identifying potential threats such as market competition, financial instability, or technical failures. However, the same process can reveal opportunities for growth, like entering a new market or leveraging emerging technologies. For instance, a startup might assess the risk of investing heavily in a new technology, but if managed wisely, this could open doors to innovative features and a competitive edge. The key is to evaluate which risks offer worthwhile opportunities and which could jeopardize the core business, ensuring that growth is pursued strategically without endangering the company's stability.

risk tolerance or ris appetite is a dynamic parameter. you should also asses whether it is still relevant for the time when decision should make. The challenge is finding a sweet pot. In the context of risk appetite, the “sweet spot” refers to the optimal balance between risk and reward that aligns with an organization’s strategic objectives and capacity for risk. This is where the organization is taking on enough risk to pursue growth and opportunities, but not so much that it jeopardizes its stability or exceeds its risk tolerance.

Imagine you’re deciding whether to invest in a new business venture. Understanding your risk tolerance is key. Reflect on past investments: Did you feel comfortable with the level of risk you took? Were there moments you wished you had taken more risks, or times you were relieved you played it safe? For instance, if you previously avoided investing in startups and missed out on significant gains, it might suggest you're ready to recalibrate your risk tolerance. By assessing these past experiences, you can better align your current decisions with your updated comfort level for risk, opening you up to opportunities that fit your revised appetite. How do you assess and adjust your risk tolerance based on past experiences?

Assessing your fear is like assessing the risk itself. The fear might arise from uncertainty, especially when we predict that something negative may happen. Thus it is important to assess the fear and understand its origin. Then we can think on what we can do about it - can we limit it? Or maybe we can accept it as is, as we can do nothing about it?

Consider implementing a decision-making matrix that weighs the potential benefits against the risks. This tool can help quantify your risk tolerance and provide a more structured approach to evaluating opportunities. Additionally, engaging in scenario planning can help visualize the outcomes of different risk levels, making it easier to make informed decisions.

Breaking through risk aversion to seize growth starts with a clear understanding of your own risk tolerance, refined through past experiences. Reflect on previous decisions and outcomes to gauge your comfort level with uncertainty. For instance, when I took a calculated risk by diversifying our investment portfolio, the initial uncertainty paid off with substantial returns, revealing that strategic risks can lead to significant rewards. This personal insight underscores the importance of recalibrating your risk threshold based on lessons learned, making you more receptive to opportunities that align with a balanced approach to risk and growth.

Imagine you’re a project manager for a construction firm planning a new high-rise building. Strategic planning in risk management involves weighing potential risks like budget overruns or regulatory changes against your project's goals. For example, you might identify the risk of fluctuating material costs but also recognize that securing a long-term contract with suppliers could mitigate this risk and provide cost benefits. By developing a detailed plan that considers both the possible risks and rewards, and outlines strategies to address potential issues, you can make well-informed decisions that balance risk with the potential for project success. How do you integrate risk assessment with strategic planning in your projects?

Incorporate regular risk reviews into your strategic planning process. This ensures that your risk management strategies evolve alongside your business goals. Additionally, involving cross-functional teams in risk assessments can provide diverse perspectives, uncovering risks and opportunities that might otherwise be missed.

Breaking through risk aversion to seize growth requires a shift in mindset from solely preventing losses to strategically embracing opportunities. By implementing a robust strategic planning process, you can evaluate risks in the context of business objectives, identifying not just potential hazards but also the rewards of calculated risks. For instance, in a recent project, we identified a market entry that seemed risky but, with thorough analysis and mitigation strategies, proved highly profitable. This approach involves developing clear plans to balance potential outcomes, ensuring decisions are informed and growth-oriented. Embracing this balanced perspective enables organizations to innovate and expand while managing risk effectively.

One approach I have found effective is to conduct a comprehensive risk assessment that not only identifies potential threats but also recognizes opportunities that may arise from calculated risks. By adopting a more proactive mindset towards risk management, organizations can shift their focus from solely mitigating threats to also leveraging uncertainties in the market to their advantage. Another key aspect of strategic planning in overcoming risk aversion is scenario planning. By envisioning various scenarios and developing contingency plans, organizations can be better prepared to navigate uncertainties and make informed decisions even in the face of potential risks.

If you don't have a business and a strategic plan with well defined SWOT and methodology to deal with each SWOT points then you won't have a business for very long.

Consider a retail company facing the risk of fluctuating sales due to seasonal trends. To mitigate this risk, the company could diversify its product line to include items that perform well year-round, invest in staff training to enhance customer service, and adopt advanced inventory management technologies to improve efficiency. By taking these steps, the company not only reduces its exposure to seasonal downturns but also positions itself to seize opportunities that competitors might avoid due to similar risks. How do you approach risk mitigation to both minimize downsides and capitalize on opportunities?

Develop a risk register that tracks identified risks, their potential impacts, and mitigation strategies. Regularly updating this register and assigning ownership for each risk can enhance accountability and ensure proactive management. Implementing key risk indicators (KRIs) can also provide early warnings, allowing for timely interventions.

I will conduct a comprehensive risk assessment that not only identifies potential threats but also evaluates the opportunities that could arise from calculated risks. By reframing risk management as a strategic enabler rather than a barrier, organizations can embrace uncertainty as a catalyst for growth. I will also leveraging technology and data analytics can provide valuable insights for making informed risk management decisions. By harnessing the power of predictive analytics and scenario planning, organizations can anticipate potential risks and develop agile response strategies to minimize their impact.

In the context of business innovation and adaptation, the Minimum Viable Product (MVP) serves as a strategic tool to manage and mitigate the risks associated with launching new products. By deploying an MVP, companies can test key hypotheses with minimal resources, reducing the fear of failure by allowing for adjustments based on early feedback. MVPs enables businesses to learn quickly what works and what doesn't, limiting financial exposure and operational disruptions. This approach foster a culture of experimentation and learning, aiming to innovate without the burden of significant initial investment, reducing the risk of costly failures.

Imagine a traditional bookstore facing declining sales due to the rise of online retailers. Embracing change involves staying updated on industry trends, such as the growing demand for e-books and online shopping. The bookstore might adapt by launching an online platform and incorporating digital book sales. Fostering a culture that values innovation—like experimenting with new store formats or events—can also help. By viewing these changes as opportunities rather than threats, the bookstore can drive growth and explore new business avenues. How do you encourage your team to embrace change and adapt to new trends?

Every business has a life cycle. At the end of the cycle you had better been investing in R&D so you will continuing life cycles.

Adopt an agile approach to change management. This involves iterative planning and continuous feedback loops, allowing your organization to adapt quickly to new information and market conditions. Encourage a culture of experimentation where small-scale pilots can test new ideas without significant risk.

One key strategy I have found effective in overcoming risk aversion is fostering a culture of continuous learning and adaptation within my organization. Encouraging team members to stay informed about emerging trends, technologies, and market shifts enables us to proactively identify and assess potential risks associated with pursuing new opportunities. Also to cultivate a transparent and inclusive environment where ideas and perspectives are valued helps us to challenge conventional thinking and explore new business possibilities. By leveraging the diverse expertise and insights of our team members, we can collectively identify and address potential risks to seize growth opportunities with confidence.

Growth for growth sake had better be supported by profitability or you can't fund the growth for very long. Otherwise you are just working for your investors.

Promote a learning culture by celebrating both successes and failures. Encourage team members to share their experiences and insights from taking risks, fostering an environment where continuous improvement is valued. Providing ongoing training and development opportunities can also help employees build the skills needed to navigate uncertainty confidently.

Don’t penalise failure; try encourage proactivity and a bias for action with a “say sorry afterwards” culture. Risk aversion can create so called analysis paralysis so facilitating behaviour to push forward is critical.

Three ideas that I personally used when I was a CRO in a non formal context as I was trying these ideas are as follows- 1) Crowdsourced Risk Innovation Challenges- Host open contests inviting external ideas to solve specific business risks, tapping diverse risk perspectives for growth opportunities. 2) Reverse Risk Mentorship Programs: Pair senior risk leaders with younger employees to gain fresh risk insights and innovation approaches from different generational viewpoints. 3) Shadow Risk Board Creation- Form a group of non-executive employees to challenge existing risk strategies and propose bold risk initiatives, providing a safe space for unconventional risk ideas.

The 4 ways of risk treatments are: 1. Aversion 2. Transfer 3. Mitigation 4. Acceptance In most of the real cases, the first route rarely works i.e. to totally avoid the risk by taking alternative routes. In some scenarios, it is possible to transfer it to another party like sub-contractors, insurance companies etc. The most practiced way is the risk mitigation i.e. to minimize the exposure with counter-measures. In case, none of the above options is viable, the route is to identify the contingent events, assessing the magnitude of impact and likelihood of occurance of such event and to keep calculated provision for the same. A risk vs reward assessment is necessary. It is more an analytical response than an emotional call.

Explore partnerships and alliances as a way to manage risk while pursuing growth. Collaborating with other companies can provide access to new markets, technologies, and expertise, reducing the burden of risk on any single entity. Additionally, stay informed about regulatory changes and industry standards to ensure compliance and identify emerging risks.

Never be afraid to fail. Cultivate that mindset. Do your due diligence, analyze the pros and cons, but don’t be afraid to fail.