In our last video, we talked about making a list of risks and then deciding whether to Accept, Avoid, Mitigate, or Transfer a risk. Today, we’ll talk about the first two options: Accept or Avoid.
When you take a risk, you need to be sure your clients are paying you to take that risk. It’s really easy to take risks that aren’t making you money.
Let’s consider two examples.
Suppose you want to streamline the order flow through your firm. If you succeed, the benefits far exceed the costs. But what if you fail? You lose your time and money. You might even disrupt business.
If you’re formal about it, you’ve estimated the odds and the dollar amounts. If you’re a normal person, you didn’t. You’re using your own seasoned judgment.
If the impact of failure is not so bad, you decide to Accept the risk. After all, removing friction from the order process is a good thing for you and your customers. On the other hand, if the impact of failure is unthinkable, you decide to Avoid the risk.
Here’s another example. Let’s say you mail out invoices with a little box where your client can fill in their credit card number and mail it back… a big convenience for the client and you get paid faster. But what if that number gets stolen?
Depending on your business, you might decide it’s worth the risk. You Accept the risk. On the other hand, you might decide that compliance costs are too high for the handful of customers that use the feature. You Avoid the risk.
But what if there’s a middle ground? What if there are other ways to deal with risk than just living with it or avoiding it completely? We’ll talk about other options in tomorrow’s video.
I’m Carter Edmonds with 20Creek. We solve IT challenges.
Episode #18 – 1/3/2019