Creating risk as strategic advantage
Complexity and volatility in the business arena is higher than ever. Everything is changing. This brings about more powerful and diverse sources of risk. Though risk is inherent within all business opportunities, many leaders prefer to be risk averse. They view risk as a threat, and avoiding risk at all cost as the goal. They often feel distrustful and suspicious, not wanting to receive any kind of risk. Risk averse people dislike risk, and therefore will stay away from adding ventures to their business because of the perceived risk of that venture, and in turn will often miss out on new and different possibilities.
When people are unwilling to receive change, they’re more likely to avoid taking risks that would invite change. This always leads to missed opportunities. Risk aversion often generates professional complacency, squashed initiatives, promotes unthinking compliance and cultivates an unconscious organisation. Consequently, the organisation operates in a weak position and organisational accomplishments are hindered.
One of the best predictors of an organisation’s health is how well the business executive and teams are willing to receive risk and respond to changes. The staying power and longevity of organisations is always defined by their ability to take advantage of new and different possibilities that are presented. In most settings, a possible future event will present both risks and opportunities.
The ability to deliver growth and performance in volatile business climates with confidence and clarity has become a business imperative in the wake of the financial crisis. In the current environment, you must develop the ability to consciously and effectively deal with uncertainty and risk. In order to thrive
in current economy, where creativity and innovation will be rewarded, you have to be able to take risk and to see it as a strategic advantage instead of something to avoid. You must be able to perceive and receive the changes, positive and negative, that may affect your organisation and the world. You must also trust in your ability to respond to these changes as consciously and skillfully as is required. What if risk was not a threat, but an opportunity? Sadly, most people view risk and opportunity as opposites. They see risk as something bad and opportunity as something good. In our view this is an erroneous interpretation. Concentrating purely on seeing risk as negative and a threat will also constrain thinking about organisational strategies and objectives. You can’t have judgement about risk being a bad thing and seeing risk as a strategic advantage at the same time. Every judgement takes you out of awareness of ‘what else is possible?’ If you are constantly looking at what could go wrong there will be a natural tendency to set fairly conservative, low risk strategies. This may be entirely appropriate for organisations with a low risk appetite and an unadventurous attitude. Maintaining this point of view will inhibit thinking about those risks or situations that you may be able to exploit to exceed your targets or perceive new and different possibilities.
Risk is inherent when you endeavour to do something new, and by definition attempting to generate new business calls for a new way of being. Please recognise that everything you’ve decided you can’t receive equals your inability to receive different possibilities. Great opportunities in business always come from occurrences and episodes that are happening now. You have all choices available when you are willing to receive risk. Obsession with security and predictability The goal of most organisations has been to stamp out unpredictability and to avoid risk. In order to maintain predictability and security you have to become risk averse and it requires judgement to maintain this. Any time you judge something as negative or come to a conclusion about anything, nothing that doesn’t match your judgement or your conclusion can come into your awareness. Most people are unwilling to risk, because they don’t want to lose. So, what would it be like to no longer judge risk as negative and bad? What would it be like if risk was viewed as just another way of looking at potential opportunity and innovation? What if risk management was viewed as innovation?
How you see risk often shapes your business strategies. You have to be willing to take advantage of risks to change your business. If you can’t see risk as opportunity or as a strategic advantage, you will never create a business that is more than what you currently have. Is that really what you want? You know you would like to have greater. You have to start looking at: “How do I take advantage of everything that I judge as risky?” Seeing risk as strategic advantage and an opportunity enabler can open your mind to the full range of different possibilities from future events. Break your pattern of thinking about risk There is a completely different way of viewing things and a completely different way of managing risk. First, you must be willing to push beyond the points of view that constrain your thinking. You can break your pattern of thinking about risk by radically changing your definition of risk. It starts with recognizing that risk can be an opportunity. In fact, the formal definition of risk found in nearly all international standards on risk, states that “Risk is anything that impacts on an organisations ability to achieve it’s strategic goals”. So, instead of judging risk as bad, you may wish to start asking, “What is the strategic advantage or opportunity with this ‘risk’?” By asking this question, you invite the awareness of a different possibility. Asking this question also can alter your perception of risks and possibility, and may help you to let go of your negative points of view that will never create innovation or growth.
From this space you can actually thrive and find joy in working with all the chaos that surrounds the current business environment. What would it be like if you were to have a level of awareness that was beyond anything you ever thought possible? This is what begins when you are willing to see risk as strategic advantage.
The key is, when thinking about risk and undertaking risk management activities, think about whether there could be a strategic advantage as well as a negative consequence from a future event. If there is, consider controls or strategies that might enable the organisation to capitalise on such situations should they arise as well as strategies or controls to minimise potential harmful outcomes. The ability to see both the potential opportunities and threats of risks will help organisations to be better prepared and confidently make better decisions. When you start to have a judgement about the risk, you will often start to limit what you can have or generate for your business. Instead, ask the question: “What can I do to use the management of this risk to my advantage?”
Risk is always present; its presence is a fact of nature.’
Learn from nature Risk is always present; its presence is a fact of nature. Risk presents both challenges and new possibilities. In the natural arena, floods and forest fires can be seen as terrible events, since they often spawn devastation in their wake. Floods generally engulf the landscape with water, but they also spread vital nutrients. For plants, the sludge that is occurring on the landscape after the flood is a strategic advantage. They take advantage of the natural fertilizer to grow and flourish. In the case of forest fire destruction, pine trees and other species have used these calamities for their own benefit. After forest fires, pine trees often flourish instead of perish. Fires generate new spaces that allow prepared pinecones to quickly take advantage of the space. What if you were willing to position yourself to take advantage of major risks, and viewed all risk as potential opportunity?
Accepting that risk is always present is the first step toward managing risks to take advantage of the opportunities and reduce the effects of the harmful consequences. Take a few moments to see what it would feel like to view risk as a strategic advantage. And what that might open up in your business. What might that generate as a possibility? When you are able to see risk as a strategic advantage, you start to create choice in your business. You don’t have choice otherwise.