Risky Business – Part 1
Risky business. What does the word “risk” mean to you? Probably risky behavior is what you first think of. Maybe you think of things like smoking, driving while intoxicated or traveling to a country torn by war. These are indeed risky behaviors.
How do you best mitigate these risks? The easiest way is to not engage in the risky behavior; you avoid the risk by avoiding the behavior.
We are taught that lesson from our earliest days. Our moms would tell us, “Don’t touch ANYTHING on the stove! You will get burned!” Or perhaps, “NEVER approach a stranger offering you candy; they will kidnap you!” How about the admonition many of us heard, “Don’t go near strange dogs; they will bite you!”
The avoidance of risk as a strategy is literally drilled into us. The unfortunate lessons we learned are that risk is bad and risk must be avoided.
Risk is part of the price of greatness
Consider these names: Magellan, Napoleon, Lewis and Clark, the Wright brothers, Henry Ford, Sonny Liston, George Custer, Bernie Madoff and Amelia Earhart.
Each of these names achieved a certain level of fame. Each were essentially successful in their arena. Each embraced a high level of risk in order to achieve their relative share of glory.
However, some are memorialized for their successful achievements while others gained great renown for their ultimate failure.
Risk in the world of business
The business world—indeed much of our free market system—is built on risk. Our system actually depends on risk. Without risk, there is no corresponding reward. If we can’t quantify risk, we can’t justify a specific value associated with accomplishing something despite the risk.
Choosing inaction as a risk-management strategy has to be evaluated as a chosen action. Picking inaction carries as much risk as picking any specific action. Inaction does not protect us from risk, it’s just another strategy.
Success in business is facilitated and aided by the ability to evaluate risk in comparison to the corresponding reward and effectively mitigating that risk in attainment of that reward. Business does not avoid risk, it learns to manage risk as a necessary part of day-to-day operation. Risk equals opportunity.
Risk and manufacturing
In the world of Advanced Manufacturing, there is abundant risky business. As a technology vendor, Cincom builds products that facilitate the effective management of risk and help the manufacturer increase the reward side of the risk equation. Software solutions related to ERP, guided selling, configuration and engineer-to-order estimating are all areas where Cincom helps manufacturers move beyond the comfort zone of inactivity into the high-return zone of managed risk and corresponding reward.
How does technology mitigate risk?
Technology can do much of the heavy lifting for managers who are hoping to discern the path to profitability through the jungle of risk. We will explore several ways in which risk can be effectively managed through technology in the next several articles in this series.
We will start with the annual ritual that we all love to hate, planning and budgeting. Next we will move to the front office and look at how equipping sales reps with the right configuration and estimating tools can eliminate costly specials and facilitate great new products for your enterprise. Finally, we will wrap up the series by looking at Supply Chain Management and execution.
So, be on the lookout for our planning and budgeting segment. We look forward to sharing with you how this annual rite can help to insulate your company from future risk!
Now Read Part 2 – Risky Business: Planning and Budgeting Diminish Risk