Taking the measure of risk
Risk is a loaded word in business. Having risk implies some sort of cost if things do not go as planned. Taking risk is necessary if you want to change the game. And talking about risk often takes a backseat to the excitement around the opportunity of the launch of a new product or initiative.In fact, while some executives and other team members have anxieties or doubts, there are typically limited forums to address risk — and because vested interests are involved, individuals may dismiss or downplay risk to keep the momentum and peace.In my work with clients, I really like this list because it allows crucial discussions among key stakeholders in a constructive way.Risk is a natural component of any new opportunity, and regardless of whether you talk about it as team (or not!), risk exists. I opt for discussing the risks specific to the initiative so that my clients and I can then talk about how to limit any exposure as a team.Thank you to Bob Martin of Ezults in Washington, D.C., for introducing me to his list, which I have adapted over the past 10 years — and which is even more essential today. While the original list was geared to high-tech product development, I have used this adapted list with clients in diverse industries, including renewable energy, health-care services and e-learning.Depending on your company’s situation you will probably have a subset of these risk types that are crucial to your efforts. The questions, too, are a starting point and may require deeper exploration:• Acceptance risk — Is the value of the initiative broadly understood and embraced by the organization? Are there pockets of resistance that we need to address?• Brand risk — Does the initiative in any way compromise, confuse or dilute our brand?• Culture risk — How does the leadership approach decision-making? Is the company sales, engineering, finance or market-driven? Can we really get this initiative to market in this culture?• Distraction risk — What are the other business priorities that may distract resources or undermine our efforts?• Financial risk — What are the financial implications of this approach or methodology to get this initiative ready for launch and market acceptance?• Human resources risk — Do we have the right people in place? And if not, will we be able to source the right team members in time frames and costs consistent with the proposed project plan and budget?• Implementation risk — Have we properly assessed implementation efforts to set market expectations and to ensure appropriate support internally?• Management risk — Does existing line and executive management have the capacity and ability to deliver given their current tasks and understanding of the market, technology and any opportunity costs? Does this project have the appropriate level of executive support?• Market risk — Do we know enough about our market’s challenges to deliver and communicate the product-market fit in an actionable way? Can we sustain our business until we reach the tipping point?• Opportunity cost risk — What are the opportunity costs of undertaking this initiative at this stage of the business?• Regulatory risk — What are the regulatory issues for which we need to account?• Strategy risk — Does the initiative align with and support our corporate strategy?• Technology risk — Is the technology being proposed a known quantity within the organization, accepted by our target markets, and feasible to build a stable product? What are the emerging technologies that we should take into account that may impact purchasing decisions?Next Steps • Assuming the market due-diligence reveals that an opportunity is real and worth pursuing, convene a meeting with key stakeholders to review those findings.• At this opportunity debriefing, balance the market opportunity and raise awareness of some of the risks. Make sure others also have a chance to speak.• At a separate meeting with vested parties, use this list to have the crucial review of the risks, the amount of exposure, what is perceived and real, and then ways to mitigate.• Identify action items, owners and timeframes.Having someone outside the vested stakeholders facilitate this discussion is ideal. This allows all stakeholders to fully participate. Also, sometimes there is a risk with inaction on an initiative. In this instance, take a hard look at what the implications are of not pursuing an opportunity — before shutting the door.Toral D. Cowieson, founder of SISUTEK, a market due-diligence and product strategy firm based on the Seacoast, can be reached at 603-828-1633 email@example.com.