No leader wants to be steeped in worry or lose sleep over potential business situations that may never happen. But, there is a way to shift how you worry, so you can use it to your advantage. To make that shift, you need to follow a process that helps you identify dangers and then develop plans to mitigate them. How do you, though, learn to worry the right way?
Focus On The Right Things That May Go Wrong
Over the span of my career, I have trained myself to worry productively. That means you focus on the right things to be concerned about and think through plans to manage and mitigate risks.
Early on, it was easy to worry about the basics:
- How to make sure we could cover payroll if customer payments were delayed
- Ensuring we had the ability to replace myself and other business leaders in the event of an untimely demise
- How to replace business assets if a fire or theft occurred
To address these concerns, we secured lines of credit, key person insurance, and standard business insurance coverage. As the years passed, the potentially disastrous risks that seemed important to consider and mitigate (to the extent possible) became slightly more complex. Worries grew to include being sued by clients if our software did not perform as expected or our services failed to produce their contractually required outcomes. Eventually, concerns included potential litigation by acquirers if representations and warranties in transaction documents failed to be correct. We loaded up on even more insurance.
Obtaining traditional and obscure business insurance is obviously a very important baseline risk mitigation activity. But, far more preparation is required to be ready when crises arise in the form of customer attrition, loss of talented team members, localized natural disasters, or other catastrophes. We developed models to diversify sales channels and customers, provided stock options and other incentive opportunities to talented team members, and set up a second technology development center halfway across the U.S.
Identify, Assess, Prioritize Potential Disasters and Risks
You may have already identified and planned responses to at least some of the disasters that might befall you and your business. Perhaps, you are sensitive to your potential business liabilities and have secured various types of business liability insurance. Maybe, you are concerned about yourself and other leaders passing away and have obtained key person insurance. Or, you may be concerned about losing electrical power and have purchased a backup power generator. But, have you comprehensively identified, assessed, and prioritized the potential disasters and risks that exist for your business?
- The process starts with you and your management team conducting a thorough review of potential disasters and risks that could impact critical business functions or outcomes. To ensure this review is comprehensive, explore several types of disasters and risks: natural events, technical events, malicious activity, talent issues, and business delivery issues, among others.
- The next step is to do some scenario planning to understand which disasters and impacts are interdependent or causally related. This helps estimate the likelihood and impact of each item.
- Finally, the disasters and risks should be prioritized based on the combination of their impact and likelihood.
The end result should be a comprehensive and prioritized list of disasters and risks, their interrelationships, the likelihood of their occurrence, and an assessment of their potential impacts. This will allow you to work on your plans for continuity or resumption of operations for each of the items on your list.
The core of this plan will require some up-front investment and planning, including training key personnel so they are ready to fill critical roles when needed, implementing technology backup and restoration measures, establishing remote work options, establishing secondary operations centers, identifying alternative suppliers, and other activities. Most importantly, you need to be as thorough as possible so the plans are actionable and can provide effective support responses when disasters strike.
By applying this streamlined methodology, you can change the way you examine, analyze, and develop responses to potential disasters and risks, positioning your business for future success. And, you will sleep better at night.
Written by Patrick Esposito.
Have you read?
Wealthiest Sports Owners in the World?
World’s Richest Actors And Their Net Worth.
World Richest Tennis Players And Their Net Worth.
Richest NFL (National Football League) Players.
Top CEOs in Singapore, 2023.
Add CEOWORLD magazine to your Google News feed.
Follow CEOWORLD magazine headlines on: Google News, LinkedIn, Twitter, and Facebook.
Thank you for supporting our journalism. Subscribe here.
For media queries, please contact: info@ceoworld.biz