Would you risk it for a chocolate biscuit?
We talk about risk a lot, from insignificant choices about what to eat through to decisions which can have a monumental impact on our lives and our businesses. We are often warned off from thinking “it won’t happen to me”, but human nature can lead us to avoid dwelling too much on the negative as it can have a debilitating impact if not kept under control.
Risk is an integral part of entrepreneurship and business. The key is understanding the risks and having a strategy to manage them. This article considers how we can be well-equipped to think about and plan for the situations which are considered to be unlikely but, if they come to pass, could have a huge impact. The reality is that at least one significant event probably will happen. However, what we do not know is which one or when it may arise.
Learning from global crises
The World Economic Forum carries out a wide-ranging survey each year to produce a Global Risks Report.[1] The 2025 edition identified state-based armed conflict as the factor most likely to lead to a global crisis this year. It is easy to feel that such a risk is so remote or so incomprehensible that nothing can be achieved by considering the implications for us and for our businesses. That said, looking back to 2020, there was no expectation of a global pandemic causing huge levels of turmoil to individuals and businesses.
There is of course an almost endless list of factors which could conceivably cause disruption, and it is unlikely that all but the largest entities will have the time or resource to create a detailed plan for each of them. However, it may be worth spending some time considering what the risks might be and what could be put in place to help mitigate them. The act of simply thinking about external factors and what impact they might have can help business leaders to feel more prepared and perhaps less surprised when or if they face another crisis.
A simple framework for risk assessment and planning
A framework for thinking through risks and developing a plan might look something like the approach below. It could be pictorial or written or explored by whichever means creativity comes the easiest.
Before beginning (perhaps with a supply of chocolate biscuits if it aids thinking), it is essential to have the right mindset. This will involve accepting that we live in a world of uncertainty and that we can expect our plans to be disrupted. Avoid discarding ideas as being too extreme or too unlikely.
Consider the macro position. What are the risks globally and nationally? It can be helpful to rate them in terms of how uncertain they are.
Now think about the impact those risks would have on your business. Would they have the potential to cause significant disruption? What could happen that would cause a problem for your business? There will be a wide range of possibilities here.
The outcomes linked to the factors with more certainty may already have been built in to your strategy. However, the uncertain factors which would have a major impact may not have been. Are there some common themes around which you could build a plan?
What might you implement now or what resources might you want to explore to mitigate risks your business may face in the future?
Even if you conclude not to take any measures at present, the act of taking time to consider risks and their effects can be a helpful exercise in being prepared for the unknown of the future. The greater risk may be not having considered what could be on the horizon or beyond.
[1] The Global Risk Reports dating back to 2010 can be found at https://www.weforum.org/publications/series/global-risks-report/
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