Execution And Your Relationship With Risk

One of the key differences between ‘high-achievers’ and the ‘also-rans’ is the ability to manage risk.

If there was zero risk involved in executing your actions, you would have an infinite market edge in business. You could merely execute constantly and your returns would multiply.

If there was 100% risk involved in executing your actions, it would just be a matter of time before your working capital is exhausted and bankruptcy would follow.

Of course, in business there is risk, but it sits somewhere in between. While you don’t know to what degree, you must have some market edge to stay in business over time and be profitable.

To execute effectively and efficiently, you must develop a balanced relationship with risk.

Managing risk starts with objective assessment.

What are the risks of executing this action? Is it high, medium or low? Is it financial or psychological? Who does it affect? What is the upside and downside?

Mastery involves being more accurate than not, in assessing risk throughout your business life.

If a business owner is too much of a risk-taker, execution on this basis will often lead to extreme outcomes – good or bad. But over time, outcomes may be skewed negative.

If a business owner is too risk-averse, execution may be held back or throttled which may result in poor outcomes through lack of activity. Over time, these businesses owners survive ‘buying a job’ in earning a living, or fade away over time.

If a business owner is a good judge of risk, we could say they are risk-tolerant.

Being risk-tolerant with a leaning to risk-aversion is probably the ideal mix within high-achievers.

Business owners that are a good judge of risk have a healthy appetite for risk. Their ability to execute actions are influenced, but unhindered, by risk.

That is not to say that they ignore risk. Quite the opposite.

These business owners understand that they are able to assess and mitigate risk over time with some advantage skewed in their favour.

In understanding this, they have a healthy psychology around risk and execute their actions feeling comfortable in them leading to winning outcomes in the long run.

Adopting a healthy risk profile is critical to SME owners in navigating their path through business life.

Reckless execution without risk filters is fatal.

Little or no execution with imbalanced risk fears is also doomed.

Adopting a risk-tolerant mindset and having a healthy relationship with risk leads to strong execution and sustainable success.

Assess risk objectively and accurately.

Execute more with greater confidence.