It is not always risk that paralyses. Often it is the vagueness of risk that does. In business it is very easy to say: “this is too risky”. It is harder to answer the question: what exactly is the risk?
Are we afraid of losing revenue? Liquidity? Key customers? The team’s reaction? The cost of transformation? Loss of control? Or simply that the decision we take will turn out to be wrong? As long as risk remains a general notion, it can grow to a size far greater than its real scale.
That is why one of the first things worth doing before taking a difficult decision is to break the fear down into specific elements:
- What could happen?
- What is the probability?
- What will the consequences be?
- What can we do if the negative scenario actually occurs?
- And — just as important — what will happen if we do nothing?
That last question is often overlooked. The status quo seems safe because we know it. That does not mean it is free of risk. Inaction can mean a continued loss of margin, customers, competitive position, time or organisational energy. The seemingly “safe” decision then becomes, in practice, the riskiest one.
Specifics take fear’s power away
When a problem is broken down into elements, something important happens. Uncertainty begins to turn into scenarios. Scenarios can be compared. Risks can be estimated. Actions can be planned. And the decision can be taken consciously.
This does not mean fear disappears. It does not have to. The role of analysis is not to prove that nothing bad will happen. Its role is to bring us to a point where we know what we are afraid of, why we are afraid of it and what we will do if it does happen. That is the fundamental difference between fear and risk management.
The biggest mistake is not always a bad decision
Entrepreneurs and managers are often afraid of responsibility for a decision that may turn out to be wrong. But there is also responsibility for the decision that was not taken: for months of delay, for missed opportunities, for problems that were known but that nobody wanted to touch, for protecting a business model that has stopped working.
That is why sometimes the only way to reduce risk is to accept the risk of change. This is not about bravado. It is about ceasing to treat inaction as a neutral option.
Name the risk first
General problems frighten. Specific problems can be solved. So before asking “Do we have the courage to do this?” it is worth asking another question: “What exactly are we afraid of?” Very often the answer turns out to be far less frightening than the question.
