Business Solutions Forum: Putting risk into perspective
I am a relatively new manager and I am challenged with the tough decisions I have to make. I really want to do a good job and don’t want to make any mistakes. Yet, I feel paralyzed by decisions that involve risk...
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The Business Solutions column in our Expert Network section is designed to be your personal business advisory sounding board with experts from different business areas available to answer your questions. The format for this, as with other Expert Network sections, is similar to a “Dear Abby” for business. Together, with a panel of experts, this forum is so you, our readers, can discuss a topic, chime in with your own ideas, and suggest different recommendations to a variety of business concerns or issues.
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Q. I am a relatively new manager and I am challenged with the tough decisions I have to make. I really want to do a good job and don’t want to make any mistakes. Yet, I feel paralyzed by decisions that involve risk and may, if they go wrong, make me look bad. What can you suggest?
A. It sounds like you might want to re-think your view on risk. You may view risk as something that is always bad, something to be avoided, and something that is in fact avoidable. Let’s examine risk and how you might want to view it. It may help with your decisions.
First, recognize that there is risk in avoiding a decision. When you postpone or push aside a decision that faces you, you have actually intentionally become a victim and exposed yourself to risk, perhaps even greater risk than the risk associated with a bad decision. Procrastination and avoidance do not eliminate or even reduce risk. At best, it postpones risk. At worst, it increases risk.
Second, risk needs to be evaluated in context. Low risk does not necessarily mean it is a good decision, and high risk does not necessarily make for a bad decision. Risk needs to be considered in light of the potential reward, the other options, and the individual and organizational ability to handle risk.
Third, risk can be managed. Make informed decisions, take calculated risks, take reasonable measures to reduce risk, monitor the situation, and take corrective action as needed.
Fourth, a goal of never making a mistake is not realistic or productive. If your goal is to not make any mistakes, you are — as you observed — paralyzed. Your fear of failure can impede good decision-making. The paralysis from fear of failure can increase your likelihood of failure.
Lastly, involve others in developing your risk strategy, particularly your supervisor. Each organization and each individual has their own risk tolerance tendencies and it is important to know what those tendencies are ahead of time because they will have a role in judging your performance.
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