Risk Management!

[StillStanding]

Things are constantly changing in the world around us, and we must constantly make decisions on how we will adapt to those changes.

The two extremes are either to have no adaptions at all, or to throw caution to the wind. The result of the first is no progress and increased isolation, and the second consists of a wild ride usually leading to bankruptcy.

The old adage is “The greater the risk, the greater the award” or “No risk equals no reward”. To make progress, you must take a risk. The most successful risk takers have mastered the art of risk management.

Let’s review the principals of good risk management.

1. You must be able to determine and quantify the maximum risk and maximum reward before committing your time and effort.
2. Focus first on how much you could lose.
3. Good risk managers don’t fall for “get rich quick” type schemes.
4. Manage risk for a marathon, not a sprint.
5. Before each and every risk, you MUST determine your exit strategy or adjustment should things turn against you.
6. You should have the discipline to stick with your exit strategy or adjustment plan to cut your losses no matter what happens. Any decision to stray from your strategy should be based on sound analysis or as a result of a change in circumstances.

In other words, before you take a risk, research and know both the risk and the award. Determine that the award in worth the risk that is being taken. Research and determine the adjustments or exit strategy that will be put in effect should things go south. Put your blueprint in writing as a business plan before taking the risk!

Why did I start this thread? In the church I see so many pastors that fear taking a risk and making changes. Because of this risk paralysis, they see very little progress. They have seen their comrades make changes only to crash and burn.

I believe the smart answer is risk management. Write a business plan before you take a risk that includes adjustments or an exit plan when things start heading in the wrong direction.

Thoughts?