Simple Risk Management for Everyday Life

Simple Risk Management for Everyday Life

Whether you serve as a team member at a Target or as the CEO of a Fortune 500 company you will have to take risks.

Risks are a part of life and each of us either choose to manage risk well or to let the risk manage us.

There is no other way around it. Risk Management is an everyday activity we take part in actively or passively.

Right now I am going to help you step up your leadership by learning about Risk Management with some clearly defined terms and a strategy to help you assess risk on the fly.

Understanding Risk Management

Here are some terms to help you classify different types of risk in your everyday life.

Low Risk - The action you are taking (or not taking) has a high success rate based on your circumstances.

High Risk - The action you are taking (or not taking) has a high failure rate based on your circumstances.

No Risk - There is absolutely no way for the action you are taking (or not taking) will fail. There will be few circumstances in life which allow for a No Risk situation.

Calculated Risk - A risk in which you have carefully considered the negative and positive effects of the risk and determined the rewards are better than effects of failure.

Un-calculated Risk - A risk in which you have not considered the effects, negative or positive, of the risk and have decided to act (or not act) anyway.

Putting Risk Management Terms Into Practice

Now that we have some terms to attach to some risks let's run some scenarios.

If you decide to go hiking but you have prepared well and know the route you want to take, then you have relatively Low Risk of getting lost. Simple, right?

Now, let's assume you are planning the same hike but you have never been to this particular location before and don't have a map or a compass. Sounds like your Low Risk has moved into a High Risk situation.

In the same scenario, you have never been to this particular location before BUT you are going with a friend who knows the trails well. You have made a Calculated Risk in which the risk factor to you in particular may be a High Risk but the reward of a great hike, spending time with a friend, and learning a new trail from someone experienced has made the risk worth the reward.

We all have risks we have to manage every day. Some seem mundane and others more urgent. Deciding on what to eat, drink, and wear are all risks we don't consider because they are so close to No Risk that we don't give them a second thought.

But, we've all had important meetings or dates or events where we agonized over what to wear.

Or been stuck between two options for a meal and then spent entirely too long deciding on where or what to eat/drink.

Decisions about whom to date, what career path to follow, or where to live are all big decisions we weigh out with lots of intentional thought being poured into the decision. Why? Because these decisions have a lot more High Risk but High Reward to them.

Yet it's the friendships we make, the classes we decide to skip, and the last minute purchases which end up becoming bigger burdens on us if things go sideways or don't turn out how we hoped.

The little risks can often matter so much more than the ones we agonize over. So shouldn't we spend even a moment of time to consider them before making yet another Un-Calculated Risk to bite us in the butt?

Simple Risk Management Strategy

This is the easy part, honestly.

Don't stress out over every single decision, but don't ignore the potential risk involved with each decision either.

When you think about a decision you are making, even if it is about what to eat for breakfast, ask yourself to assign a type of risk to the decision (above).

After recognizing the type of risk involved, act accordingly.

I told you this was the easy part.

Knowing the risk involved is half the battle. The other half is actually following through with the information you have in front of you.

If you start to pour a bowl of cereal and remind yourself to assess the situation and, by doing so, remember you are out of milk, then you have turned a Low Risk situation that could have started your day off on the wrong foot and made it a No Risk situation by choosing to eat a bagel with cream cheese instead.

Simple. So simple. Yet it can have an overall positive effect on every day, little things!

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I am a freelance writer with a background in Ministry and experience everywhere from technical document writing to copy writing to creative writing. I have interests and knowledge in Ministry, Marketing, Parenting, Leadership, and Technology. If you are looking for someone to work with and like what you see, then email me at [email protected] or check out my portfolio at dylmill.contently.com.