I have probably had more exposure to the outcomes of a high risk than most. Having been bankrupt before and losing everything and starting from scratch again teaches you some very valuable lessons, many of which I believe have been fundamental to both the business and life’s success. I have achieved. In a way, they were lessons that I needed to have. I want to explore risk in business and mechanisms which you can put into place to control it.
As with all of these Ideal Business criteria, there is no perfect level of Risk. This very much depends on where you are at, your preference, and your experiences.
Your Ideal Risk Level
Definition of Risk:
A situation involving exposure to danger, [in singular] the possibility that something unpleasant or unwelcome will happen, [mass noun] the possibility of financial loss.
Taking this meaning into account you can see that Risk is very much a subjective thing. What do you consider danger? What would you consider unpleasant or unwelcome?
When you look at risk levels a good approach is to look at the worst-case scenario that may eventuate and are you prepared to live with that if it eventuates. If not then I would suggest the Risk level is too high.
So for example if it all goes badly and you would lose your house – if you’re ok with this happening then you can live with it – if not need to reassess. A key thing to consider with Risk is your age and time to rebuild and roll out again.
So when you look at Risk there is always a source. So the best way to look at the level of risk and how to control it is to identify the different sources.