The World Of Risk Management: Five Tips In Maintaining Balanced Control In Risk

Imagine a job where you work 100% for free 24/7/365 without realizing you're already doing it. What are you trying to do every day you go to bed and put the blankets over yourself? Why do you close and open the blinds in your house at certain times of the day? Do you worry about a place you're staying at where the front door is not equipped with any lock mechanisms? Why bother blowing air on your cup of hot coffee?

All those questions can relate to managing risk, including circumstances that does not have to be just something you find in emergency responders or in a security job or even in something pertaining to preventing harm. Therefore, when managing risk, we probably do it close to a hundred times, daily.

In this newsletter, I share five tips where you can expand your awareness, including some frameworks you can utilize to your mind when executing risk management.

1. Beyond Balancing Risk: Identifying Inherent Risk, Tolerant Risk, & Anticipated Risk

Risk comes in nearly all shapes and sizes. Therefore, every day that we tackle risk, do you stop and think ahead to a degree, if you could, eradicating or at least mitigating the risk?

While it's good to identify risks' in the "green" (low), "yellow" (moderate), and "red" (high), have you felt like you "hit a stonewall" when after you complete the "identification stage", you feel overwhelmed after realizing there seems to be so many risks to tackle in the yellow and/or red?

Inherent risk pertains to identifying risk or analyzing actions before moving forward with executing action, where each respective action is examined and noting what it would entail. Sometimes, inherent risk may be drawn to certain circumstances (case-by-case or not) that would be beyond your control, including no matter how much you try to mitigate the risk.

To put it in perspective, with identifying inherent risk, when you come across analyzing the available actions you have in front of your respective situation(s), you could simply ask yourself questions regarding a door like, "Can we eliminate the risk of what a public-accessed door brings by simply removing it?" or "Can we apply layers of access by adding more than one door before finally 'approving' entry to the building?" or even "Can we simply work with all the risks' that inherently comes with a publicly-access door and figure out other methods to mitigate the risks it brings as we go along?", etc.

When laying out your action plan, all actions obviously will not always be risk-free. When discovering inherent risk, do you adjust your plans, or do you feel it's "fine" to work with the risk(s)?

Tolerant risks may draw parallel to inherent risks, however tolerant risks lean more towards "bumps on the road" and even when laying out your action plan, not literally every single risk can be 100% accounted for in advance.

Circumstances generally always comes up along the way. Obviously, when the time permits and at the earliest convenience, you want to try to eradicate, if not, mitigate the discovered risk. If appropriate, if you can't do either, you can look into trying to work around the risk.

Respectively, whether you actively or passively plan your day-to-day personal and professional activities, tolerant risks may constantly come up, to put it in perspective for example, every day you drive on the road, do you ask yourself questions like, "Does my 'usual' route(s) involve tackling potholes on the road on a persistent basis?", "How can I get from 'Point A' to 'Point B' as safely as possible whether or not if I should refrain utilizing highways when figuring out my own detours, utilizing backroads, utilizing toll roads, etc.?" or perhaps "Should I even bother driving on the road altogether and manage what I can get done remotely?", etc.

When you observed plenty of circumstances in your life experience where if you feel you're able to determine whether or not if you should expect to tackle areas of concerning circumstances, you're attempting to layout anticipated risk.

Granted, when you have observed plentiful of obstacles in your life experience, analyzing anticipated risk is a healthy mindset as you're attempting to plan in advance what risks you feel you should expect to tackle. Obviously, not all anticipated risks occur, but just like a seatbelt, when an anticipated risk does in fact take place, you'll be glad you were prepared.

Altogether, analyzing inherent, tolerant, and anticipated risk may serve you well in your professional and personal life with mitigating, eradicating, and/or working with day-to-day risks as little as possible, especially with tackling risks that you would consider in the yellow and red.

Generally put, there is no such thing as a perfect system. Nevertheless, the more you obviously and continually invest in polishing your risk management skillset, the more at ease you'll be able to experience because think about it, smart thinking, the opportunity to reduce stress in your daily life, and less worry of feeling overwhelmed, why not?

2. Uncontrollable vs. Controllable Risks

The unfortunate side of uncontrollable risks pertains to risk that usually cannot be eradicated or suppressed. However, like a seatbelt, preparation is key with how we can utilize the best strategies to mitigate as little damage as possible and obviously save lives. A seatbelt is obviously designed as a lifesaving tool, but that also obviously doesn't mean it will 100% prevent all vehicle accidents. Per the aforementioned subheading, uncontrollable risks may meet all such risk categories such as inherent, tolerant, and anticipated.

For example, when it's comes to an earthquake (generally parallel with how to tackle floods, heat wave, tornados, etc.), it's an inherent risk because that is the very nature of the planet, tolerant risk when laying out how to remain safe as best as possible when an earthquake is active, and anticipated risk due to such events simply being no way around on putting a stop to earthquakes, or another way of putting it, not a question of "if" but actually "when", when will the next earthquake occur.

Other circumstances pertaining to uncontrollable risks does not only regard with natural disasters, but can also include [1] financial (changes in value of currency, general dangers of credit card use, pandemics, etc.), [2] personal (age, family history, geographical location, etc.), [3] history (past errors affecting future generations, environmental shifts, technological progress, etc.), and much more.

Every day, risks can be observed in seemingly several upon several directions and the amount of red flags that may occur in day-to-day operations can be nearly endless. While the respective circumstances may never check-off the human element, controllable risks can be executed with tactics such as mitigation strategies, risk assessments, and continuous monitoring and reviewing, etc.

With the aforementioned tactics altogether, having a contingency plan (risk mitigation strategy), establishing a well-executed IAET action plan (identifying, analyzing, evaluating, and treating; risk assessments), and maintaining effective mitigation measures (continuous monitoring and reviewing), you'll have a rock-solid grip of effectively deterring whatever may be deemed as "too many risks" getting out of control.

Every day, risks and red flags occur. As there may be so much too tackle, it can get easily overwhelming. Risks and red flags are a never-ending story; therefore, there is only so much that you can consistently tackle day-by-day.

Altogether, you can only do all that you can respectively commit to. When you effectively implement systems (that may also be lifesaving) into continuous action when uncontrollable risks do occur and keeping controllable risks from getting out of hand, you'll have a solid grip of preventing disastrous results on both sides.

3. "100 Lightbulbs" Risk Monitoring Mindset

When faced with a high volume of numerous activities to continuously look out for, keeping on the watch is paramount.

To illustrate, say you're tasked with looking over one hundred lightbulbs, ensuring all bulbs remain continuously emitted at full brightness. In the event one or more lightbulb(s) burns out, you replace it as needed, including in the event a bulb dims, you still replace it.

Should one or more lightbulb(s) loses its light entirely, usually it is easy to spot, therefore easy to replace. However, when continuous situational awareness may fall short, for example, only one lightbulb dims, what are the chances of catching that occurrence?

You could assess yourself, if something that doesn't look right, appears "changed", or out of place, etc., then it is worth conducting an analyzation.

Should the event one dimmed lightbulb not be rectified whatsoever, you could mistakenly "adapt" (or "get used to it") and then risk a gradual possibility of the "domino effect" taking place that could have been prevented from the very start. When was the last you looked at an indication meter, notice that it is literally one measurement off (of any chart), and debate to yourself whether or not should you just physically tap on the meter, and then move on?

Keeping eyes on one hundred lightbulbs may gradually feel like a lot of work as times passes, but when observing a high volume of activity, would you much rather catch the one dim lightbulb in the first place? Letting too many lightbulbs go dim on a frequent basis may risk having to utilize more energy than you necessarily have to, therefore, risking a deep "rabbit hole" situation that may be incredibly difficult to pull out of.

4. Eisenhower Matrix: When "Slammed" With Multiple Risks

On a case-by-case circumstance, you may find yourself facing risks where you may be persistently tackling more than what keeps your hands full. When such obstacles occur, keep in mind that you are only one person.

An Eisenhower matrix can be a suitable framework to utilize when tackling a large number of risks that could overwhelm you if you attempted to tackle all risks at the same time.

As shown in the above graph, you may find this matrix slightly different than what you would find in an "Eisenhower matrix" according to, for example, Google images. However, if you find yourself in circumstances where you see tasks that are of low importance and low urgency (or "neither urgent nor important"), you may see that "deleting" such risks may not be an option, but rather if such risks need to be eventually attended to, then tasking the risk as "low-priority" comes into play.

When so much is keeping your plate full, instantaneous results are not always going to occur. Rather, maintaining a consistent flow in managing what's on your plate, you lessen the possibility of burning yourself out and keeping your plate from continuously piling over more than what your plate can carry. To expand, while you're maintaining that consistent flow, you may never know when an opportunity window will arise that may actually assist you as a helping hand to tackle what's on your plate, like for example, cutting down on repetitive tasks.

Along the way, as an Eisenhower matrix can help you out as a stepping stone, you may never know what other stepping stones along the way that you'll find until you see the first-hand experience for yourself.

5. Not All Risks Are Foreseeable

The unfortunate part about potential catastrophic circumstances is that not all can be anticipated in advance. Respectively, history has shown us this on levels that it has never been seen before until it finally happens. With that, one may feel hopeless with why then should we invest in the effort at all to take control and mitigate risk?

Some organizations may apply a level of discipline in a way when disaster does strike, they may deem such circumstances as "unacceptable." Ask yourself this, how can you prepare for something that has never happened before? Even if you do "prepare" for such pertinent risks, are you absolutely certain it's an accurate preparation?

Nevertheless, being prepared and keeping all risks in continuous check is not only a good way to ready-up for disasters that may not have happened before, but when it does strike, you'll have perhaps the best foot in bouncing back from the disaster, not letting it get too out of control and mitigating the amount of damage it caused as little as possible.

However you prepare yourself, it is not always going to be a perfect system. Even if you were certain you had a "perfect" system, things continually change, and you'd likely have to adjust accordingly.

Altogether, appropriately preparing yourself and continuously adjusting to change, when something really bad occurs or is about to occur, you'll be able to effectively pull back, and as already mentioned, steering clear from a deep "rabbit hole" situation that may be incredibly difficult to pull out of.

Closing: AI Tools Becoming Common Practice For Activities Including Risk Management? Are We Missing Something?

With risk management, red flags occur every day. Nevertheless, there are going to be times where perhaps an overwhelming amount of red flags simply cannot be tasked as "low priority", and the same time, there won't always be a big budget to hire the manpower it requires to tackle all such flags. Is this where AI steps in and solves both circumstances?

AI may be perceived as a powerful tool that many may criticize it as something that can replace people and their jobs. Can AI, in fact, actually be a true benefit in assisting with not only providing coverage in overwhelming circumstances but also cutting down on repetitive tasks?

Ask around if, in this case, AI sounds too good to be true, then it's too good to be true? No doubt, if a complicated matter can be rectified with a seemingly simple solution, is it not wise to ask yourself, are we missing something? Again, and a key point that is worth consistently reminding yourself in some, if not most circumstances, there is no such thing as a perfect system.

As a side note, nowadays, it may not be difficult at all to find plenty of individuals who rely heavily on their thinking abilities with digital social media. The day AI tools become common practice and an "everyday essential", would it be a surprise if too many individuals may permit AI tools to do all the thinking for them? Again, are we missing something?

Still, AI tools can play a balanced role in risk management, just if you permit it to do all the thinking for you, would you be doing yourself a disfavor?

Your thoughts?

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