We’ve discussed this topic briefly in the Capable People LinkedIn Discussion Group, while we examined the definition of “risk” that will apparently underpin ISO 9001:2015 – the effect of uncertainty on objectives. However I have never been 100% certain about what exactly is meant when “upside risks” are mentioned. I can have a view on it, as can others, but do we KNOW what the intent of that reference is?
Yesterday I saw a news report about BBC commissioning strategy that made me think again about it in a different way. The piece suggested the BBC should “take more risks”. The context was that playing safe in the commissioning of TV programs might not be the best thing to do. It was suggested that some of the more groundbreaking programs of recent times have initially been programs the BBC was not 100% sure about for one reason or another. Is THIS “upside risk” I asked myself? If it is, what are the practical implications when it comes to managing “upside risks”? Obviously the process for managing negative risks (risk assessment and risk treatment) is well established, but upside risks? An upside risk is something you’d like to transpire, and you may elect to take a punt on it, but can you control an upside risk? And if so, what would the structure for “upside risk treatment” look like?
My first thoughts are that it should encourage the organisation to understand the negative implications of “safe” or “risk averse” strategies. Nothing ventured, nothing gained in other words, and also maybe to have a really close look at what “tolerable risk” might be on a case by case basis. In business I do this all the time. I do take a few risks, and several have lost me time and money, however (by trial and error) I have been able to distill my own strategy (if you can call it that) into a few simple mantras;
- never bet more than you can afford to lose
- make sure you understand worst case scenario and can live with it
- apply limits and stick to them
The thing is, in business especially, there are few certainties, and understanding the odds as well as you can is about as much as you can do. This actually brings me back to an article I wrote over 5 years ago about a conversation I had on a long haul flight with a professional gambler. Funny how things come full circle every now and then, isn’t it?