“If there’s a 50% chance of something going wrong, then 9 times out of 10 it will.”
Anon Case study
A popular and successful town centre restaurant was flooded when the nearby river burst its banks during a sustained period of heavy rain. Drying and refurbishment work took many months, during which time the restaurant remained closed for the whole of that year’s tourist season, normally the busiest (and most profitable) time of year.
The flood was described as a “100 year event”, but 8 years later the same thing happened again – except that this time the flood water was deeper. With another season’s profits lost, the owner decided not to re-open and moved to a new location to start his business up all over again.
The balanced view
Almost every business opportunity has a potential downside. But some of the risks that we take also have a potential upside – that’s why we take them. Indeed, a business may consciously decide, as part of its strategy, to take a high level of risk because of the potential rewards.
We need to balance the opportunities (to make a profit, grow the business, move into new markets, launch new products and services, etc.) against the potential downsides (such as over commitment, the impact of interest or exchange rate fluctuations, inability to sell our wonderful product or service, inability to pay our staff, etc.).
It’s not possible to create a completely risk-free environment. But what we can do is manage risk more effectively. We can identify risks, quantify them and, once we understand what we’re up against, we can make informed, considered decisions regarding what (if anything) to do about them.
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