In the past, I defined risk as a harmful activity or event. However, Roget’s Super Thesaurus (2003) lists uncertainty and exposure as synonyms for risk. Therefore, I now view risk management as the preparation for uncertainty and exposure.
Several years ago, I decided to venture into virtual assistant services to earn extra income. In my plan, I limited risk management to management of failures or harmful events. It did not occur to me that my marketing efforts would exceed my expectations. I exposed myself to a level of success that I was not prepared to enter.
I became overwhelmed by the demands for a low-cost virtual assistant – so did my support team. I lost clients because I had to either reject their assignments or I repeatedly missed deadlines. I lost control of my project because I did not properly prepare for all the uncertainties.
The Lesson Learned
While I received the monetary boost I was seeking, I did it at the expense of my company’s reputation, my personal health, and my relationships with my family. However, the knowledge gained from my failure in risk management proved more valuable than the money I earned.
The “Should Have’s
I should have identified my uncertainties by using techniques such as SWOT analyses and brainstorming. I should have then categorized and prioritized those uncertainties using work breakdown structures and diagrams. Next, I should have analyzed the data to determine the probability of the uncertainties occurring, their effects on the project, and the value of the uncertainties in terms of time and costs. Finally, I should have planned responses to each uncertainty and developed a method to monitor and control them.
Opportunities for Monetary Gain
Identifying the source of risk exposure can often lead to an opportunity. If I implemented the prior strategies listed, I would have revealed several opportunities. For example, a simple quantitative SWOT analysis would have revealed that I need to increase my prices to offset the time need to complete a task.
Opportunities to Reduce Risk
Analysis of uncertainties would have revealed risks that could be shared with contractors and customers. For example, I should have passed marketing responsibilities to contractors and eliminated risks to my available time. Another example would be to share the risk of losing data with the customer by requiring files be sent electronically using particular formats.
Public’s Response to Risks
In addition to the benefits of cost and time an effective risk management plan has on a project, mandates exist that demand management engage in risk planning and mitigation. Government agencies and/or stakeholders require us to respond ethically to the demands of society by developing programs that consider analyzed risks. In the professional services industry, the public demands corporate transparency and processes to protect private information. The government supports the publics’ demands for privacy protection by regulating how customer’s private information is stored and used, and by enforcing strict penalties for violations to these regulations.
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Reference: McCutcheon, M. (2003). Roget’s Super Thesaurus, Third Edition. Cincinnati, OH: Writer’s Digest Books.