risk

February 3, 2010 - Are You Playing to Not Lose?

Main Idea

Do you play to win?  Or do you play to not lose?  Do you go full tilt forward or do you go slowly forward and are very careful about failing?

Expansion of Idea

As most of you may know, I am a pretty risk-averse person.  I am wired that way.  Part of that may be due to breaking so many bones when I was a kid.  About 15 years ago, my wife and I were on vacation with her family in Florida.  Someone had a brilliant idea to get some wave-runners and go up to a nearby island.  I had never ridden a wave-runner, the ocean was choppy, and I was not feeling great before I started.  (Needless to say, I really did not want to go.)  On the way to this island, I took it fairly slow and I really felt bad.  We then had lunch in a hole in the wall restaurant.  My brother in law looked at me and said “You really hate this, don’t you?”  I was really dreading getting back on the wave-runners and going back.  On the way back, I decided if I was going to die, I was going to die quickly.  I went faster and remarkably it was a much smoother ride.  The moral of the story is that there are some things that if you are going to do them, you need to go full tilt. 

The same is true in business.  How many of us are doing things that we are supposed to do but we are not giving it our best?  We aren’t necessarily trying to be lazy.  Instead, we may not understand exactly what we are trying to accomplish.  Or, the systems are not in place to do it well.  Or, we have not devoted enough time and money to accomplish the activity well.  When these barriers are in place, we hold back on our performance thereby guaranteeing mediocrity at best or failure at worst. 

Start by Asking Yourself these Questions:

  • What activity is not getting your best efforts?

  • Why are you not giving that activity your best effort?

  • Is there something you can do to improve your effort?

  • Do you need help and resources to accomplish your goals?

And No, I have not been on a wave-runner since then.

January 20, 2010 - When Was the Last Time you Evaluated Your Risks?

Main Idea

If you woke up this morning, looked at your to do list and the only thing that you had to get done today was to evaluate your risk management, would you go back to sleep? 

Expansion of Idea

The only things less appealing to most of us than risk management are probably doing your tax return or getting a root canal without anesthesia.  Most of us would not know where to start in evaluating risk even if we knew that we needed to do so. 

First, I want to define what I mean by risk management.  When I use the term, I mean the process of evaluating your activities, looking at what could go wrong and setting up systems or policies to take care of the potential problems.  Most people just think that they need insurance to handle risk.  That is obviously part of the solution.  Another part is having the right legal structure.  But the biggest part is looking at your business and seeing what you could fix or improve.  When you have systems that keep breaking down, then that is hurting your business.  When your computer hard drive crashes, your business will be hurt.  We need to be prepared for the big disasters, such as an earthquake or fire. 

We also need to be prepared for the controllable disasters that happen when a customer is hurt by your product or service.  And I think that when my client is hurt by our products or services, it is in a lot of ways more of a disaster than if my business is burned to the ground.  I have backups of data and insurance policies for the fire.  But I may not be able to fix the loss of goodwill if we hurt a customer.  Yes, I can reimburse them for the financial loss because I have insurance.  But goodwill probably will not be restored.  And that can put me out of business.

Here are some things to think about:

  • Is there anything in my business that needs to be fixed and will add value to my customers?

  • What can go wrong with my business that may be out of my control?  Are there systems that can be put in place to minimize the damage to the business and to our customers?  Is this something that can actually add value to the relationship?

  • When was the last time I met with my insurance agent and attorney?