In the world of business today there are considerable opportunities for those that specialise in risk management. Risk managers can work across a wide range of different sectors, from construction to nursing, from finance to insurance. Understandably, whilst there may be certain specialisms within the discipline, it is the general principles and approaches that are learnt early on that give managers the tools to carry out project. But for those wanting to enter a career in this subject, what is the best plan of action?
When you have decided upon a career in the managing of risks it is always advisable to register your interest with a local college or university where risk control can be coupled to another business type course. This form of academic learning can however take a great deal of time, for those a little further into their careers, a project management course such as an MoR course can help to give an idea of the principles and can assist in steering your career in that direction.
As well as ensuring you are receiving the right education it is also important to find part time work in a relevant post whilst you are studying. This can be massively helpful when you have finished your course as it shows employers that you have a desire to succeed in the discipline.
Once you have completed your education it is advisable to either find internship positions or jobs as management juniors. This learning on the job will enhance your knowledge of the discipline and will make you a better candidate for advancement later down the line. Additionally, if you have no home commitments it is always advisable to let employers know that you are willing to travel as part of your career. These types of professionals are needed throughout the world so making yourself available makes you a more appealing prospect for career advancement.
Once you have become a bona fide and successful manager you can not only carry out your duties on the ground but can start to work in a consultative role on larger projects and even start training younger managers, passing on your knowledge for the next generation.
How to Succeed As a Risk Management Professional
by , under Risk Management, Risk Management Professional, Succeed Risk
Choosing the Best Risk Assessment Technique
by , under Assessment Technique, Best Risk Assessment, Risk Assessment, Technique
Almost everything that is involved in the business world today includes risks. The habits of the customers might change, new competitors suddenly appear and other factors that you cannot control will put your business in line with danger. However, there is really no reason to panic especially if you have an excellent risk analysis system. You will need to perform a formal risk evaluation in your entire organization so that you can completely manage the situation that your business is in. you will need to decide on actions that will help you in minimizing the possible effects of the dangers or the things that might cause disruptions to your plans. Risk is defined as the perceived extent of potential loss of an organization. Different companies can have their own risk assessment technique and finding the right method for your business is not that hard.
When it comes to choosing the most suitable risk assessment technique for your business, you should first look at the impact of the risk that you are currently observing. There are risks that do not have a huge effect on the business that most of the time the business owners ignore. However, there are also some that have the ability to destroy your livelihood. Next is to look at the probability of the event. Does it have a hundred percent chance of attacking your business or is there a chance that it might not hit your company at all? In doing so, you are able to compare the risks in an objective way.
You also have to think about the industry that you belong to. Assessing risks in hospitals, health care centers and such is quite different when you are in the commercial business world. This is because there are some risks that are distinctly different from one corporate entity to another. For instance, at hospitals, there might be risks involving medicines such as accidental discharge of medicine. This does not happen at a typical law firm or even at a regular office. Therefore, the environment that you are in plays a vital role when it comes to choosing the technique that you should be using.
Of course, in order for you to really know which one to select as your risk assessment technique, you should know your choices. One of the most used today is the ETA or the event tree analysis, which is based upon binary logic. This is where an event is considered or assessed regardless of whether it has already happened or not and whether it has failed or not. This is considered as a valuable scheme in analyzing the aftermaths of an event which may be caused by failure or by undesired situations as perceived by the company itself. Another risk assessment technique that you can use is the failure mode and effects analysis or FMEA. This is generally used in product development as well as in operations management. This aids the managers in determining the potential failure manners that a system might give through the classification of the likelihood and the severity of such errors.
When it comes to choosing the most suitable risk assessment technique for your business, you should first look at the impact of the risk that you are currently observing. There are risks that do not have a huge effect on the business that most of the time the business owners ignore. However, there are also some that have the ability to destroy your livelihood. Next is to look at the probability of the event. Does it have a hundred percent chance of attacking your business or is there a chance that it might not hit your company at all? In doing so, you are able to compare the risks in an objective way.
You also have to think about the industry that you belong to. Assessing risks in hospitals, health care centers and such is quite different when you are in the commercial business world. This is because there are some risks that are distinctly different from one corporate entity to another. For instance, at hospitals, there might be risks involving medicines such as accidental discharge of medicine. This does not happen at a typical law firm or even at a regular office. Therefore, the environment that you are in plays a vital role when it comes to choosing the technique that you should be using.
Of course, in order for you to really know which one to select as your risk assessment technique, you should know your choices. One of the most used today is the ETA or the event tree analysis, which is based upon binary logic. This is where an event is considered or assessed regardless of whether it has already happened or not and whether it has failed or not. This is considered as a valuable scheme in analyzing the aftermaths of an event which may be caused by failure or by undesired situations as perceived by the company itself. Another risk assessment technique that you can use is the failure mode and effects analysis or FMEA. This is generally used in product development as well as in operations management. This aids the managers in determining the potential failure manners that a system might give through the classification of the likelihood and the severity of such errors.
The Effects of Marijuana Legalization
by , under Effects of Marijuana, Marijuana Legalization
The effects of marijuana legalization in Colorado began when medical marijuana usage became law with the passage of Ballot Amendment 20 which was approved on November 7, 2000 by 54% of voters. It became effective June 1, 2001, and since this date the effects of marijuana legalization have a source of dispute between employers and employees. This law allows those who have been prescribed marijuana by their physician to legally use the drug in the state of Colorado without fear of arrest. The physician must state that the patient suffers from a serious medical condition that could improve with marijuana use.
The effects of marijuana legalization present a problem for employers who decide to perform mandatory drug testing of their employees. Although Colorado does have an anti-discrimination provision to their medical marijuana laws, employers still retain the right to fire any employee who tests positive for marijuana. Employers may rightfully claim this right through the federal law that makes marijuana possession, cultivation, or use illegal.
Of course, most people would agree that employers have the right to have employees who are sober and straight while at work. No employer could be expected to harbor employees who are not performing their job duties because of any drug or alcohol use, even if it is helpful for medical conditions. Employers must clearly state in their policies for employees that medical marijuana is not permissible on the job, and that any positive drug test will result in termination of employment if they intend to implement a work policy such as this.
The effects of marijuana legalization also encompass the fact that employers must also adhere to the Americans with Disabilities Act, 29 C.R.R. 1630.14 which protects employees from being discriminated against because of a mental or physical condition. Employers must make reasonable accommodations for those with disabilities, but it is still questionable whether or not this includes the use of medical marijuana.
Only one state, Rhode Island, has a law against firing a worker for using a lawful substance. The Rhode Island Medical Marijuana Act protects workers who must take mandatory drug tests at work. So far, Colorado has no such law, and an employer may fire a worker who tests positive, even if the worker has a legal pass from his or her physician.
The effects of marijuana legalization present a problem for employers who decide to perform mandatory drug testing of their employees. Although Colorado does have an anti-discrimination provision to their medical marijuana laws, employers still retain the right to fire any employee who tests positive for marijuana. Employers may rightfully claim this right through the federal law that makes marijuana possession, cultivation, or use illegal.
Of course, most people would agree that employers have the right to have employees who are sober and straight while at work. No employer could be expected to harbor employees who are not performing their job duties because of any drug or alcohol use, even if it is helpful for medical conditions. Employers must clearly state in their policies for employees that medical marijuana is not permissible on the job, and that any positive drug test will result in termination of employment if they intend to implement a work policy such as this.
The effects of marijuana legalization also encompass the fact that employers must also adhere to the Americans with Disabilities Act, 29 C.R.R. 1630.14 which protects employees from being discriminated against because of a mental or physical condition. Employers must make reasonable accommodations for those with disabilities, but it is still questionable whether or not this includes the use of medical marijuana.
Only one state, Rhode Island, has a law against firing a worker for using a lawful substance. The Rhode Island Medical Marijuana Act protects workers who must take mandatory drug tests at work. So far, Colorado has no such law, and an employer may fire a worker who tests positive, even if the worker has a legal pass from his or her physician.
Reduce Risk With Internal Control
by , under Internal Control, Reduce Risk, Risk Management
There are seemingly never ending demands on the owners and managers of most organizations. Attracting new business is challenging in these economic times. Quality delivery is paramount. Administration is demanding. An effective system of internal control is often overlooked. Too often, overreliance is placed on trust which contributes to problems such as fraud, bad decisions, poor allocation of resources and ineffective reaction to errors.
Internal control includes the processes and procedures an organization puts in place to safeguard assets, enhance the accuracy and reliability of financial information and to comply with financial and legal obligations, for example Canada Revenue Agency or Internal Revenue Service reporting requirements and covenants that may exist through agreements with financial institutions.
It can be challenging for smaller organizations to implement controls. Segregation of duties is a key control. For example, the person who handles cash receipts should not be responsible for bank deposits. With a small team, it can be difficult to achieve this. Nevertheless, there are some practical steps that can be taken.
Effective internal control is very dependent on the "tone at the top". Owners and senior management must demonstrate a commitment to ethical behaviour and support the operation of effective controls. Consideration should be given to establishing specific codes of conduct, communicating them to all members of the organization and including them in employment agreements. Hiring procedures warrant careful consideration. It is important to request references and perform background checks.
It is very important to clearly define and document your business processes and controls. Written business processes not only support internal control, they serve to train new staff and to add value to your organization because key processes are documented and not dependent on the knowledge of one or more key employees. In addition, business continuity in the face of a departure of a key employees becomes less of a risk.
To help identify what your key controls should be, think about what could go wrong and identify practical steps to prevent the problem from occurring. For example:
* Do your inventory management processes include adequate controls to protect your inventory such as secure storage areas with appropriately restricted access?
* Do you have documented guidance that provides reasonable assurance that transactions will be coded to the correct accounts in your financial records, contributing to accurate information to make effective decisions?
* Have you established a budget and do you compare actual results to your budget to identify areas requiring further investigation for potential problems?
The above are only a few examples of control considerations to establish an effective internal control environment. Above all, your controls must be practical, support efficient business operations and be cost effective. It's also important to remember that controls will never eliminate risk; rather, appropriately designed controls will contribute to effective risk management.
Your organization can benefit from an annual review of your internal control environment - as organizations grow and change, controls must change accordingly. Our OTUS Financial Management Assessment includes an overview assessment of internal control to determine if there are opportunities for improvement.
Internal control includes the processes and procedures an organization puts in place to safeguard assets, enhance the accuracy and reliability of financial information and to comply with financial and legal obligations, for example Canada Revenue Agency or Internal Revenue Service reporting requirements and covenants that may exist through agreements with financial institutions.
It can be challenging for smaller organizations to implement controls. Segregation of duties is a key control. For example, the person who handles cash receipts should not be responsible for bank deposits. With a small team, it can be difficult to achieve this. Nevertheless, there are some practical steps that can be taken.
Effective internal control is very dependent on the "tone at the top". Owners and senior management must demonstrate a commitment to ethical behaviour and support the operation of effective controls. Consideration should be given to establishing specific codes of conduct, communicating them to all members of the organization and including them in employment agreements. Hiring procedures warrant careful consideration. It is important to request references and perform background checks.
It is very important to clearly define and document your business processes and controls. Written business processes not only support internal control, they serve to train new staff and to add value to your organization because key processes are documented and not dependent on the knowledge of one or more key employees. In addition, business continuity in the face of a departure of a key employees becomes less of a risk.
To help identify what your key controls should be, think about what could go wrong and identify practical steps to prevent the problem from occurring. For example:
* Do your inventory management processes include adequate controls to protect your inventory such as secure storage areas with appropriately restricted access?
* Do you have documented guidance that provides reasonable assurance that transactions will be coded to the correct accounts in your financial records, contributing to accurate information to make effective decisions?
* Have you established a budget and do you compare actual results to your budget to identify areas requiring further investigation for potential problems?
The above are only a few examples of control considerations to establish an effective internal control environment. Above all, your controls must be practical, support efficient business operations and be cost effective. It's also important to remember that controls will never eliminate risk; rather, appropriately designed controls will contribute to effective risk management.
Your organization can benefit from an annual review of your internal control environment - as organizations grow and change, controls must change accordingly. Our OTUS Financial Management Assessment includes an overview assessment of internal control to determine if there are opportunities for improvement.
Risk Management: The Assessment of Various Risks
by , under Assessment of Various Risks, Risk Management, Various Risks
Risk management deals with the identification of risks, understanding their level of assessment and also prioritizing them so that they can be handled in the right manner. Strategies used to manage include transferring risks to third parties so that they take on the burden of handling them and also accepting a part of the risk consequences to mitigate the and take step to provide a solution to it.
Various standards have been set for risk management and these include standards set by the Project Management Institute and the National Institute of Science and Technology as well as ISO Standards. The core activities in risk management are as follows:
• Identifying risks and assessing them to find out their impact
• Identifying ways to reduce it and prioritizing risks based on the strategy that must be taken to minimize them
• Assessing the vulnerability of assets to threats
There are many ways in which it can be minimized. These include the design of new business process that has the right containment measure in pace to control it. Another way is to transfer risk to a third party which is capable of handling it. Assess the level of problems caused by risks in on-going activities and check how much of a threat they pose to the organization. Some of them are accepted as part of normal functioning, while others need to be kept in check so that they do not escalate the problem.
There are various activities involved in management and it is one of the most crucial elements that an organization has to check out. These include planning how risk is to be managed for a particular project, creating risk reporting channel, preparing mitigation plans so that these are reduced and assigning an officer to handle the risks so that they do not escalate.
Various standards have been set for risk management and these include standards set by the Project Management Institute and the National Institute of Science and Technology as well as ISO Standards. The core activities in risk management are as follows:
• Identifying risks and assessing them to find out their impact
• Identifying ways to reduce it and prioritizing risks based on the strategy that must be taken to minimize them
• Assessing the vulnerability of assets to threats
There are many ways in which it can be minimized. These include the design of new business process that has the right containment measure in pace to control it. Another way is to transfer risk to a third party which is capable of handling it. Assess the level of problems caused by risks in on-going activities and check how much of a threat they pose to the organization. Some of them are accepted as part of normal functioning, while others need to be kept in check so that they do not escalate the problem.
There are various activities involved in management and it is one of the most crucial elements that an organization has to check out. These include planning how risk is to be managed for a particular project, creating risk reporting channel, preparing mitigation plans so that these are reduced and assigning an officer to handle the risks so that they do not escalate.
Risk Management and the Challenges With Drug Legalization and Employee Recreational Use
by , under Challenges With Drug, Drug Legalization, Employee Recreational, Risk Management
If you fly an airliner, there is a rule that can be summed up very quickly "eight hours between bottle and throttle," which means you cannot drink any alcohol whatsoever eight hours before you will fly a passenger jet. That's a good law if you are an airline passenger, and we know there have been cases where pilots have shown up drunk to fly the airplane, and they were dutifully booted off the plane and arrested forthwith. That's also a good thing from a risk management standpoint, not to mention from Federal Aviation Regulation (FAR) safety procedures perspective.
Now then, if they legalize marijuana in California that opens up a whole can of worms with regards to risk management. If employees are allowed to use recreational drugs on their personal time, how many hours are they allowed to use those drugs prior to coming to work? If they stay up late the night before and party with friends smoking marijuana, and they get up for five hours later while there are still tired and semi-impaired - and come to work, can they do so safely?
Remember they still have the THC in their bloodstream, and it could cause them to have slower reaction times, and perhaps cause an accident at work. Formerly, I was in the car washing industry, and as you know it's a mechanized robotic system that cleans the cars. An employee that is around that equipment could easily get caught up in it and get injured or even killed in extreme cases, it happens all the time, I at least read about one case per month in the car wash industry trade journals.
Companies buy insurance to protect against risks, but the more claims they have the higher their insurance goes. And it doesn't necessarily have to be the company that has an accident, it could be another company in the same industry or several companies in that industry, and then all the insurance carriers raise the prices and premiums for the whole industry you see. The higher the cost for workers compensation and insurance means less profit for businesses, and that means the businesses may not be financially viable at some point and they will either have to lay off people, or close the businesses, and in that case everyone loses their job.
If you are a pot smoker you probably think I'm going overboard and blowing this out of proportion, but I assure you I am not, I've been in business 27 years, and we've dealt with employees that we had the fire to for substance abuse - still I understand the other side of the perspective, because I really do love freedom, and don't want to tell people what to do or how to live their lives.
Also realize if it is legal, it's no longer considered substance abuse, it's just a recreational drug which is now legalized. But that doesn't take away the danger, and as much as folks who smoke marijuana will tell you that it's not a dangerous drug, that's not entirely true, and these new "hybrid plants" which are being grown today have a lot more THC in them, they are much more potent than they were in the 60s.
And realize I've never smoked pot my life or done any illegal drugs (heck I won't even take an aspirin), but this is what I hear from the medical reports, and from folks who are involved in medical marijuana. This is a serious issue from a risk management standpoint, and on the business side of the issues. That's why the chambers of commerce are against the legalization of marijuana in California. We will see how the vote goes during the election, but it's going to be a problem for business, that I assure you. Please consider all this.
Now then, if they legalize marijuana in California that opens up a whole can of worms with regards to risk management. If employees are allowed to use recreational drugs on their personal time, how many hours are they allowed to use those drugs prior to coming to work? If they stay up late the night before and party with friends smoking marijuana, and they get up for five hours later while there are still tired and semi-impaired - and come to work, can they do so safely?
Remember they still have the THC in their bloodstream, and it could cause them to have slower reaction times, and perhaps cause an accident at work. Formerly, I was in the car washing industry, and as you know it's a mechanized robotic system that cleans the cars. An employee that is around that equipment could easily get caught up in it and get injured or even killed in extreme cases, it happens all the time, I at least read about one case per month in the car wash industry trade journals.
Companies buy insurance to protect against risks, but the more claims they have the higher their insurance goes. And it doesn't necessarily have to be the company that has an accident, it could be another company in the same industry or several companies in that industry, and then all the insurance carriers raise the prices and premiums for the whole industry you see. The higher the cost for workers compensation and insurance means less profit for businesses, and that means the businesses may not be financially viable at some point and they will either have to lay off people, or close the businesses, and in that case everyone loses their job.
If you are a pot smoker you probably think I'm going overboard and blowing this out of proportion, but I assure you I am not, I've been in business 27 years, and we've dealt with employees that we had the fire to for substance abuse - still I understand the other side of the perspective, because I really do love freedom, and don't want to tell people what to do or how to live their lives.
Also realize if it is legal, it's no longer considered substance abuse, it's just a recreational drug which is now legalized. But that doesn't take away the danger, and as much as folks who smoke marijuana will tell you that it's not a dangerous drug, that's not entirely true, and these new "hybrid plants" which are being grown today have a lot more THC in them, they are much more potent than they were in the 60s.
And realize I've never smoked pot my life or done any illegal drugs (heck I won't even take an aspirin), but this is what I hear from the medical reports, and from folks who are involved in medical marijuana. This is a serious issue from a risk management standpoint, and on the business side of the issues. That's why the chambers of commerce are against the legalization of marijuana in California. We will see how the vote goes during the election, but it's going to be a problem for business, that I assure you. Please consider all this.
Employee Theft Higher in the United States
by , under Employee, Employee Theft, Employee Theft Higher, Theft Higher
According to The Global Retail Theft Barometer, an annual study researching retail shrink and theft across multiple countries, North American retailers have more employee theft than any other country or region in the world. Take into consideration the vast difference in the number of retailers in the United States versus Canada and one can conclude that employees in the United States steal more than any other country.
The study, conducted annually by The Centre for Retail Research, shows that retail shrink (the loss of inventory and goods) decreased across the globe in 2009 by almost 6 percent (5.6%) from the previous year. That being said, the cost of shrink loss was still a staggering $107.3 billion (U.S. dollars). North American retailers reported the highest reduction in shrink loss of 7 percent, which still accounted for losses over $42 billion (U.S. dollars) or 39.9% of the overall shrink loss in the global retail industry.
Here are some additional facts and figures related to employee theft from within the study.
* North American dishonest employees made up 28 percent of the overall employee theft across the globe.
* An average dishonest employee steals 10 times more than an average shoplifter ($1,944 versus $196).
* Over 670,000 dishonest employees were apprehended in the United States in 2009.
* Although shrink is down, the number of incidents (both internal and external) increased overall across the globe.
The University of Florida publishes a U.S. report on shrink each year known as the National Retail Security Survey. According to its 2009 National Retail Security Survey published this year, employee theft represents 43% of the total retail annual loss of over $33 billion, the highest contributor to overall retail loss. Costing the U.S. retail industry over $14 billion, the survey states that there is no other form of larceny that costs more than employee theft.
The results of both of these studies clearly show that employee theft in the United States is a major issue in the retail industry. And according the global landscape, employees from North America are apparently far more dishonest than anyone else in the world. I disagree.
Is it possible that the reason North America has such high numbers of employee dishonesty is because we are better at apprehending them than our foreign retailers?
Having personal experience in working with U.S. and non-U.S. retailers, here are a couple of reasons why I believe North America shows signs of increased employee theft over other countries.
Technology: Although there are many technologies out there being used by loss prevention departments, the user of exception-based reporting (EBR) is still far greater in North America than anywhere else in the world. Well into its 2nd decade of use across North America, EBR systems are still in their early years of use across Europe and other countries.
Although grown in its use across many retail companies, the primary function of an EBR system is to analyze, detect and investigate point of sale issues and concerns. The focus of this analysis is primarily employee theft detection, and with great success, means an increase in the number of reported employee theft situations.
As other countries continue to adopt this tool into their LP toolkit, it will be most interesting to see if the statistics related to employee theft begin to change.
Employment Laws: The United States has a more liberal employment environment when it comes to investigating situations involving our employees. Compared to other countries, the U.S. allows a retailer to more easily investigate and terminate an employee for theft or work-related issues.
Employment laws or privacy restrictions often prevent our foreign counterparts from fully utilizing technology like EBR systems or camera systems to investigate employee theft (depending on the country). With these legal restrictions or lacking technological support, apprehending a dishonest employee can be more difficult. A loss prevention department without the ability to utilize certain data in their analysis, or restricted in their ability to interview a suspect is going to find it more difficult to apprehend employees. Take that ability away and it is natural to lose that desire to investigate these types of loss.
Turn the situation around. How do we think a U.S. loss prevention department would fair if their hands were "cuffed" by increased laws restricting the investigation of employee theft?
These are two reasons why I believe that the North America shows an increase in employee theft than our retail peers across the globe. Do you agree? Disagree? Have other reasons or ideas?
A seasoned veteran of the retail industry and loss prevention profession, David Johnston is currently the Director of Business Development for LP Innovations, the leading outsource loss prevention provider in the United States and Canada. Serving the loss prevention industry for over two decades, he has held various positions as a practitioner, industry consultant and solution provider.
The study, conducted annually by The Centre for Retail Research, shows that retail shrink (the loss of inventory and goods) decreased across the globe in 2009 by almost 6 percent (5.6%) from the previous year. That being said, the cost of shrink loss was still a staggering $107.3 billion (U.S. dollars). North American retailers reported the highest reduction in shrink loss of 7 percent, which still accounted for losses over $42 billion (U.S. dollars) or 39.9% of the overall shrink loss in the global retail industry.
Here are some additional facts and figures related to employee theft from within the study.
* North American dishonest employees made up 28 percent of the overall employee theft across the globe.
* An average dishonest employee steals 10 times more than an average shoplifter ($1,944 versus $196).
* Over 670,000 dishonest employees were apprehended in the United States in 2009.
* Although shrink is down, the number of incidents (both internal and external) increased overall across the globe.
The University of Florida publishes a U.S. report on shrink each year known as the National Retail Security Survey. According to its 2009 National Retail Security Survey published this year, employee theft represents 43% of the total retail annual loss of over $33 billion, the highest contributor to overall retail loss. Costing the U.S. retail industry over $14 billion, the survey states that there is no other form of larceny that costs more than employee theft.
The results of both of these studies clearly show that employee theft in the United States is a major issue in the retail industry. And according the global landscape, employees from North America are apparently far more dishonest than anyone else in the world. I disagree.
Is it possible that the reason North America has such high numbers of employee dishonesty is because we are better at apprehending them than our foreign retailers?
Having personal experience in working with U.S. and non-U.S. retailers, here are a couple of reasons why I believe North America shows signs of increased employee theft over other countries.
Technology: Although there are many technologies out there being used by loss prevention departments, the user of exception-based reporting (EBR) is still far greater in North America than anywhere else in the world. Well into its 2nd decade of use across North America, EBR systems are still in their early years of use across Europe and other countries.
Although grown in its use across many retail companies, the primary function of an EBR system is to analyze, detect and investigate point of sale issues and concerns. The focus of this analysis is primarily employee theft detection, and with great success, means an increase in the number of reported employee theft situations.
As other countries continue to adopt this tool into their LP toolkit, it will be most interesting to see if the statistics related to employee theft begin to change.
Employment Laws: The United States has a more liberal employment environment when it comes to investigating situations involving our employees. Compared to other countries, the U.S. allows a retailer to more easily investigate and terminate an employee for theft or work-related issues.
Employment laws or privacy restrictions often prevent our foreign counterparts from fully utilizing technology like EBR systems or camera systems to investigate employee theft (depending on the country). With these legal restrictions or lacking technological support, apprehending a dishonest employee can be more difficult. A loss prevention department without the ability to utilize certain data in their analysis, or restricted in their ability to interview a suspect is going to find it more difficult to apprehend employees. Take that ability away and it is natural to lose that desire to investigate these types of loss.
Turn the situation around. How do we think a U.S. loss prevention department would fair if their hands were "cuffed" by increased laws restricting the investigation of employee theft?
These are two reasons why I believe that the North America shows an increase in employee theft than our retail peers across the globe. Do you agree? Disagree? Have other reasons or ideas?
A seasoned veteran of the retail industry and loss prevention profession, David Johnston is currently the Director of Business Development for LP Innovations, the leading outsource loss prevention provider in the United States and Canada. Serving the loss prevention industry for over two decades, he has held various positions as a practitioner, industry consultant and solution provider.
How To Risk Proof Your Investment Plan
by , under Investment Plan, Risk Proof
During the past few decades there have been numerous successful and not so successful investors that have had a go at commercial real estate investing. As such there have been a plethora fail safe measures that one can use in order to protect their investment against risk.
The biggest measure is to conduct proper due diligence. Due diligence is nothing more then the process you go through before you decide to place a bid on a property. This includes going through all of the financial documents, performing a physical inspection of the entire property, and making sure that all of its legal documents are in place and accounted for. Over 80% of all deals will go south during the due diligence phase as unspecified tidbits will come to light. If you do not do a thorough job in this department the consequences could be costly or even cause you to lose the property. However, when conducted properly completing your due diligence could actually sweeten the deal. For example, if you find something wrong with the property you could negotiate for a much lower price when you are fully aware that fixing the problem would cost only a few thousand dollars.
The second biggest measure is to make sure that you do not overpay. This is a very common problem for new investors who are looking for a property to get started on as quickly as possible. If you are buying an apartment complex then make sure you are aware of how much you are paying per unit. No matter what you are purchasing you need to compare your bid to the closing price of similar properties. If you overpay then you could mess up your properties cash flow for a very long time.
The third measure is to gain an expert level knowledge of your market. You need to know your market like the back of your hand and by doing so you will set yourself up for some amazing profits down the road. Before you close on any deal, be sure that you know details such if there are any slow seasons for the rentals and how competitive your rentals will be against those in the surrounding area.
The biggest measure is to conduct proper due diligence. Due diligence is nothing more then the process you go through before you decide to place a bid on a property. This includes going through all of the financial documents, performing a physical inspection of the entire property, and making sure that all of its legal documents are in place and accounted for. Over 80% of all deals will go south during the due diligence phase as unspecified tidbits will come to light. If you do not do a thorough job in this department the consequences could be costly or even cause you to lose the property. However, when conducted properly completing your due diligence could actually sweeten the deal. For example, if you find something wrong with the property you could negotiate for a much lower price when you are fully aware that fixing the problem would cost only a few thousand dollars.
The second biggest measure is to make sure that you do not overpay. This is a very common problem for new investors who are looking for a property to get started on as quickly as possible. If you are buying an apartment complex then make sure you are aware of how much you are paying per unit. No matter what you are purchasing you need to compare your bid to the closing price of similar properties. If you overpay then you could mess up your properties cash flow for a very long time.
The third measure is to gain an expert level knowledge of your market. You need to know your market like the back of your hand and by doing so you will set yourself up for some amazing profits down the road. Before you close on any deal, be sure that you know details such if there are any slow seasons for the rentals and how competitive your rentals will be against those in the surrounding area.
Workplace Surveillance Rules and Laws
by , under Rules and Laws, Workplace Surveillance, Workplace Surveillance Rules, Workplace Surveillance Rules and Laws
Want to know the general rules and principles for camera, email, internet surveillance in the workplace then here is a convenient summary in lay terms. refer to the WORKPLACE SURVEILLANCE ACT 2005 (NSW) for full details or your legal practitioner for specific advice.
What is ok:
* It is ok to have cameras at work. The just need to be obvious and not hidden and employees need 14 days prior written notice before you can use them. See Section 10 of the Act.
* It is ok for computer surveillance to safeguard your data, networks, resources and information. See Section 12 of the Act that confirms you need to have a policy about this and employees need to have advance notice and expect it will occur, so I suggest send them an email policy and notice and let them know it is continuous and ongoing.
* It is ok for vehicle tracking and like the above you need to simply make employees aware and also have a notice on the vehicle which can be as simple as a sticker in the cabin.
What is not ok:
* You cannot have cameras in toilets, showers, change rooms. see Section 15 of the Act.
* You cannot use hidden camera UNLESS you have covert surveillance authority, which is possible to establish unlawful activity. See section 20 of the Act.
* You cannot use surveillance for employee performance monitoring.
* You cannot block internet or email access, see Section 17 of the Act. Except you CAN if you have a policy about it. so why not write a quick policy if you wish to prevent access to facebook, twitter, etc.
Hope this general summary is a help. Good luck protecting your assets, systems, information and employee time.
What is ok:
* It is ok to have cameras at work. The just need to be obvious and not hidden and employees need 14 days prior written notice before you can use them. See Section 10 of the Act.
* It is ok for computer surveillance to safeguard your data, networks, resources and information. See Section 12 of the Act that confirms you need to have a policy about this and employees need to have advance notice and expect it will occur, so I suggest send them an email policy and notice and let them know it is continuous and ongoing.
* It is ok for vehicle tracking and like the above you need to simply make employees aware and also have a notice on the vehicle which can be as simple as a sticker in the cabin.
What is not ok:
* You cannot have cameras in toilets, showers, change rooms. see Section 15 of the Act.
* You cannot use hidden camera UNLESS you have covert surveillance authority, which is possible to establish unlawful activity. See section 20 of the Act.
* You cannot use surveillance for employee performance monitoring.
* You cannot block internet or email access, see Section 17 of the Act. Except you CAN if you have a policy about it. so why not write a quick policy if you wish to prevent access to facebook, twitter, etc.
Hope this general summary is a help. Good luck protecting your assets, systems, information and employee time.
Avoiding Disaster by Understanding Your Business Processes
by , under Avoiding Disaster, Business Processes, Business Risks, Disaster, Understanding risk
In this article I will use the commercial credit approval process as an example of how to properly manage risk utilizing the fundamentals of process management. To begin understanding the risk inherent in your business it will be critical to first fully map the process the business undertakes to extend credit either long or short term to customers. Through this process it will be better understood who is making critical decisions, what those decisions are based on and where the potential failure points are. It is not necessarily the most obvious risks that undermine business operations. It is usually the less obvious and the easiest to overlook that create the greatest risk. It is the multitude of overlooked indicators that cause nuclear plant meltdown and not one catastrophic event. It is through this process that proper audit points, procedures and policies can be created. Process mapping also helps the organization understand proper staffing requirements and if the work flow is optimal to begin with.
Create a Roadmap for Implementation
From the initial work a full implementation roadmap can be constructed. It is important to note, however, that any quick fixes should be made as soon as possible. If obvious issues are identified, quickly raise those to the proper level of leadership and make corrections. This will stop the most egregious of errors from continuing and bring credibility to the effort in the early stages. The full roadmap should contain very specific information related to what the actions are, who owns the action and when they will be completed. Other important information will be how often teams will meet, management review schedules and how report outs will be formatted. As the team goes through the process it will be critical to frame recommended changes with data. Many changes, though potentially simple, will touch on policies that are policies of default and can be difficult to change. These changes can affect compensation, customer relationships and long established company practices.
Create a Roadmap for Implementation
From the initial work a full implementation roadmap can be constructed. It is important to note, however, that any quick fixes should be made as soon as possible. If obvious issues are identified, quickly raise those to the proper level of leadership and make corrections. This will stop the most egregious of errors from continuing and bring credibility to the effort in the early stages. The full roadmap should contain very specific information related to what the actions are, who owns the action and when they will be completed. Other important information will be how often teams will meet, management review schedules and how report outs will be formatted. As the team goes through the process it will be critical to frame recommended changes with data. Many changes, though potentially simple, will touch on policies that are policies of default and can be difficult to change. These changes can affect compensation, customer relationships and long established company practices.
Contract Risk Assessment
by , under Contract Risk, Contract Risk Assessment, Risk Assessment
Contracts don't have to be measured in inches - it's a long time since lawyers were paid by the word. Neither do they have to be some academic foray into the distant realms of possibility. On the other hand, they do have to afford you the protection you need when things go wrong.
We are all used to the concept of risk analysis as it pops up in most areas of our life, - from Councils taking the conkers off trees in case someone throws a stick up and it falls and injures a passer-by (I didn't make that up!), to assessing the risk that our computers will send all our personal data across the ether to a student hacker. Why then, do we so often fail to 'risk-assess' our contractual arrangements?
It often seems as if the contractual process is, for many organisations, a purely administrative one: Agree deal, find document that looks as if it might fit the bill, change the names and products, sign it and file it. Note that there was no actual consideration of the relevance of the document in that process - no assessment of the risks involved in this particular transaction and how they might differ from the previous one.
For example, I've come across cases where no account was taken of the different lead times or specialist safety requirements and storage conditions in agreements for the manufacture of products - both of which could have had significant cost (and liability) implications. Similarly, when taking on a new customer, it may be wise to look for a quicker get-out clause than you would use in a contract with an established customer, or to spell out what you will (and will not) do for them in greater detail if they have less experience of dealing with organisations like yours.
The corollary to the above is an agreement of mine which has recently been reviewed by a firm of solicitors acting for one of the parties. Their suggestion that we ought to include a clause making it clear that all payments would be made in Sterling made me smile - the agreement is between two East Midlands (UK) organisations with no international connections and involves relatively small sums of money. What did I say about lawyers being paid by the word?!
My advice to anyone negotiating or drafting contracts would be to carry out a risk assessment, but be pragmatic. Look at:
* What can go wrong?
* What is the probability that it will go wrong?
* What are the implications of it going wrong in terms of time, money and reputation?
* Is the risk one you are prepared to live with, or should it be covered by the contract?
No contract can protect you against all possible risks, and if a risk is slight and the implications minor, you may be prepared to accept that for the sake of the brevity of the document. However, if the probability of the 'event' is high and/or the implications are severe, it ought to be covered.
How each identified risk which you want to have covered will actually be dealt with in the contract is then a matter for a closer look at the risk analysis. Simply highlighting the matter may be enough for a highly probable - low risk event, whereas a more detailed and 'technical' clause will be appropriate for a high-risk event.
The overall aim should always be to make the length and complexity of the contract appropriate to the risks you face. If it needs to be 20 pages long, fine. But if it only needs to be 2 pages long - save the trees, and your money!
Don't risk it. Always create your contracts with clarity.
We are all used to the concept of risk analysis as it pops up in most areas of our life, - from Councils taking the conkers off trees in case someone throws a stick up and it falls and injures a passer-by (I didn't make that up!), to assessing the risk that our computers will send all our personal data across the ether to a student hacker. Why then, do we so often fail to 'risk-assess' our contractual arrangements?
It often seems as if the contractual process is, for many organisations, a purely administrative one: Agree deal, find document that looks as if it might fit the bill, change the names and products, sign it and file it. Note that there was no actual consideration of the relevance of the document in that process - no assessment of the risks involved in this particular transaction and how they might differ from the previous one.
For example, I've come across cases where no account was taken of the different lead times or specialist safety requirements and storage conditions in agreements for the manufacture of products - both of which could have had significant cost (and liability) implications. Similarly, when taking on a new customer, it may be wise to look for a quicker get-out clause than you would use in a contract with an established customer, or to spell out what you will (and will not) do for them in greater detail if they have less experience of dealing with organisations like yours.
The corollary to the above is an agreement of mine which has recently been reviewed by a firm of solicitors acting for one of the parties. Their suggestion that we ought to include a clause making it clear that all payments would be made in Sterling made me smile - the agreement is between two East Midlands (UK) organisations with no international connections and involves relatively small sums of money. What did I say about lawyers being paid by the word?!
My advice to anyone negotiating or drafting contracts would be to carry out a risk assessment, but be pragmatic. Look at:
* What can go wrong?
* What is the probability that it will go wrong?
* What are the implications of it going wrong in terms of time, money and reputation?
* Is the risk one you are prepared to live with, or should it be covered by the contract?
No contract can protect you against all possible risks, and if a risk is slight and the implications minor, you may be prepared to accept that for the sake of the brevity of the document. However, if the probability of the 'event' is high and/or the implications are severe, it ought to be covered.
How each identified risk which you want to have covered will actually be dealt with in the contract is then a matter for a closer look at the risk analysis. Simply highlighting the matter may be enough for a highly probable - low risk event, whereas a more detailed and 'technical' clause will be appropriate for a high-risk event.
The overall aim should always be to make the length and complexity of the contract appropriate to the risks you face. If it needs to be 20 pages long, fine. But if it only needs to be 2 pages long - save the trees, and your money!
Don't risk it. Always create your contracts with clarity.
Three Variables to Calculating Risk Exposure
by , under Calculating Risk Exposure, Risk Exposure
As you are aware risk management (as per PMI) is not to identify what could go wrong with a project but what is unknown about a project. Unknowns are risks. So what is a risk? Well risks are twofold:
1. They are bad things that could happen that will negatively impact a project (or at least a task).
2. They are good things that will happen that will positively impact a project (or task).
So essentially a risk is an unknown no matter how it is classified.
You may also be aware that risks are currently and for the most part always measured by their Probability and Impact that they could have on a project. The Problem is that Probability and Impact only account for 2/3 of the answer. Below is a chart that explains this further. We will use a scale of 1 to 10 to measure, 10 being the greatest. Remember the formula for Risk Exposure number is Probability x Impact. When we add the 3rd variable we will divide Probability and Impact total by the Detectability number. This is done so the modified Risk Exposure number run from least to greatest on a scale of 1 to 10. I for one prefer to use whole numbers rather than decimals since we as a society tend to think on a scale of 1 to 10.
Formula: (P X I) / Detectability= Risk Exposure
Being Hit by a Train
Probability = 1
Impact = 10
Traditional Risk Exposure = 10
Being Eaten by a Shark
Probability= 1
Impact = 10
Traditional Risk Exposure= 10
Being Hit by a Meteorite
Probability = 1
Impact = 10
Traditional Risk Exposure = 10
Now add the element of Detectability. To illustrate this we will work with the Traditional Risk Exposure number from above.
Being Hit by a Train
Traditional Risk Exposure = 10
Detectability = 10
New Risk Exposure = 1
Being Eaten by a Shark
Traditional Risk Exposure= 10
Detectability = 2
New Risk Exposure = 5
Being Hit by a Meteorite
Traditional Risk Exposure = 10
Detectability = 1
New Risk Exposure = 10
Now as you can see each risk has a Probability and Impact that are the same. You must agree that each have a low chance of happening but if they do happen have a severe impact on your life. Yet, this tells us nothing about the risk. The real question is if I can see it coming or not. This is where Detectability comes to play. For the Shark we have a very little chance of knowing when we will be eaten. We might see a fin so we give it a 2. The same can be said of the Meteorite yet, even if we see it coming it is too late to do anything, so we will give it a 1. The train on the other hand is very detectable. Why? Well first it is on a given track. We can see down the track for a mile or so. The train also makes a lot of noise and is very predictable. To avoid being hit we move left or right a few feet.
These examples are only for illustrating how Detectability can be used to help weed out risk from a large pool of risk that a project may have. The point is, that many PMs and Risk Manger only rely on Probability and Impact which may focus too much attention on a risk that can be seen coming. Granted a meteorite hitting you has a probability of almost zero but since you cannot detect it very easily it is something that you should review.
Once Detectability is added to the equation managers have a better idea of what risks need a more attention and which one can be placed to the side for a moment. All risks need some level of attention and should never be allowed to go unchecked.
1. They are bad things that could happen that will negatively impact a project (or at least a task).
2. They are good things that will happen that will positively impact a project (or task).
So essentially a risk is an unknown no matter how it is classified.
You may also be aware that risks are currently and for the most part always measured by their Probability and Impact that they could have on a project. The Problem is that Probability and Impact only account for 2/3 of the answer. Below is a chart that explains this further. We will use a scale of 1 to 10 to measure, 10 being the greatest. Remember the formula for Risk Exposure number is Probability x Impact. When we add the 3rd variable we will divide Probability and Impact total by the Detectability number. This is done so the modified Risk Exposure number run from least to greatest on a scale of 1 to 10. I for one prefer to use whole numbers rather than decimals since we as a society tend to think on a scale of 1 to 10.
Formula: (P X I) / Detectability= Risk Exposure
Being Hit by a Train
Probability = 1
Impact = 10
Traditional Risk Exposure = 10
Being Eaten by a Shark
Probability= 1
Impact = 10
Traditional Risk Exposure= 10
Being Hit by a Meteorite
Probability = 1
Impact = 10
Traditional Risk Exposure = 10
Now add the element of Detectability. To illustrate this we will work with the Traditional Risk Exposure number from above.
Being Hit by a Train
Traditional Risk Exposure = 10
Detectability = 10
New Risk Exposure = 1
Being Eaten by a Shark
Traditional Risk Exposure= 10
Detectability = 2
New Risk Exposure = 5
Being Hit by a Meteorite
Traditional Risk Exposure = 10
Detectability = 1
New Risk Exposure = 10
Now as you can see each risk has a Probability and Impact that are the same. You must agree that each have a low chance of happening but if they do happen have a severe impact on your life. Yet, this tells us nothing about the risk. The real question is if I can see it coming or not. This is where Detectability comes to play. For the Shark we have a very little chance of knowing when we will be eaten. We might see a fin so we give it a 2. The same can be said of the Meteorite yet, even if we see it coming it is too late to do anything, so we will give it a 1. The train on the other hand is very detectable. Why? Well first it is on a given track. We can see down the track for a mile or so. The train also makes a lot of noise and is very predictable. To avoid being hit we move left or right a few feet.
These examples are only for illustrating how Detectability can be used to help weed out risk from a large pool of risk that a project may have. The point is, that many PMs and Risk Manger only rely on Probability and Impact which may focus too much attention on a risk that can be seen coming. Granted a meteorite hitting you has a probability of almost zero but since you cannot detect it very easily it is something that you should review.
Once Detectability is added to the equation managers have a better idea of what risks need a more attention and which one can be placed to the side for a moment. All risks need some level of attention and should never be allowed to go unchecked.
Risk Your Way to Success
by , under Big Career risk, Business Risks, Fear Taking Risks, risk to success, Strategic Skills, Taking Risks
In 1994, a young man, Jeff Bezos, had a gut feeling that the internet was going to be big and thought he could be part of it.
In July 1995 he launched Amazon.com to sell books online. It was an idea whose time had come because the business grew incredibly fast. Eighteen months later, Amazon.com had $16 million US in sales. He took the company public in 1997. In 1999 he began the process of adding more product areas. The growth has continued. It is now the world's biggest online retailer with three times as many sales as its nearest rival. In 2009, in the midst of the global economic crisis, Amazon.com increased its annual sales by 28% from the previous year with net sales of $24.51 billion.
Why am I telling you this? The courage to take risks is an important soft skill.
Amazing things can happen when we are prepared to take a risk and follow through. It's about trusting intuition and gut feelings. More importantly, it's about trusting ourselves. Jeff Bezos launched Amazon.com not knowing whether it would succeed or not. There was no precedent.
It was Robert Ronstadt who discovered in his work that those who built successful businesses and careers had one unique thing about them - they had the courage and faith to launch their businesses, to take risks in advancing their careers, with no guarantees of success.
This is what risk taking is about - no guarantees of success. It doesn't mean, however, that the risk isn't calculated and well thought through.
What are the Big Career and Business Risks?
* Making a sea change.
* Transitioning to a new career.
* Going back to university and retraining.
* Moving interstate.
* Taking a position overseas.
* For women - starting a family.
* Starting your own business.
* Launching a new service or product range.
* Bringing in a new partner to your business.
* Taking out a large loan.
Taking Risks Day to Day in Your Career or Business.
* Approaching the CEO regarding a work issues that you are not happy about.
* Making a formal bullying claim against a work colleague.
* Negotiating a salary increase.
* Having a crucial conversation with a team member who is underperforming.
* Making a particular phone call where the outcome could be positive or negative.
* Dealing assertively with a difficult client or work colleague.
Soft Skills are as Important as Strategic Skills.
Some would argue that taking risks is more about developing strategic skills than developing interpersonal, communication and people skills, soft skills in other words. Strategic skills are important in implementation. Without highly developed soft skills, however, success is unlikely.
So what are these soft skills that are so important in taking risks?
They are the skills of self-management and self-mastery, those concerned with managing yourself.
* Overcoming the fear and anxiety so you can take the risk in the first place.
* Believing in and trusting yourself.
* Resilience to be able to bounce back from the inevitable set-backs that occur along the way.
* Handling other's disapproval and even derision.
* Continuing undaunted when no one believes in what you are doing.
This demands considerable self-discipline and focus. It also demands persistence and perseverance.
When You Fear Taking Risks, What Do You Do?
When you are challenged to take a risk, there is usually something in the "risk" that deep down really excites you. It is often something that you really would like, but dare not attempt to achieve, make happen or claim for yourself. There is a part of you that dares not dream that it may be possible. There is another part of you that says you would fail anyway.
1. Explore the risk from an emotional point of view.
There is no risk in doing that much (or maybe there is for some people!). If you don't, you are denying and suppressing something deep inside you that is very important to you. You are not even giving yourself the opportunity to see if it may be possible.
Ask yourself:
* Why is it a risk?
* What is the worst thing that could possibly happen if I took the risk and failed?
* How could I handle that in a resilient way and bounce back?
* What would happen to my life, however, if I took the risk and was successful?
* Does the possibility of success outweigh the risk of failure?
2. Inform yourself from a practical point of view.
* Gather all the information you can for and against this particular risk factor.
* Seek out people who can give you information that may allay your fears and concerns - someone who has done what you fear to do, another professional or business owner, a coach or mentor.
* Talk with objective outsiders as well as people who know you well.
3. List the pros and cons.
4. Step back for a while and let yourself process what you have worked through about the risk.
5. After you have given yourself time to consider the risk, make a decision - yes or no.
If you have moved through this process being open and honest with yourself, your "yes" or "no" will be confident and free from the fear and anxiety that was there at the beginning. You will know, without doubt, you have made the right decision for now. That doesn't mean that at some time in the future you may not revisit this. The risk content next time will be far less because of the work you have done this time.
If, however, having gone through this process, you are still anxious, worried and fearful, then it may be that there are "things" blocking you that will continue to create obstacles for you in achieving what you want for your life. You may find it very helpful to talk through with an objective third person who can help you discover and remove those blockages.
"I am frightened of taking risks, but have hopes and dreams that I'll never achieve unless I learn to overcome my fears. Where do I start?"
If you are asking this question, you are more than half way there. You know what you want and need to do and are asking for help and support to do it.
1. Start small.
Take small risks first because every time you take a risk you become more and more confident in yourself and less and less afraid of doing so. If you don't at first succeed, it's not so devastating if the risk is small.
For example, you may have met someone at a networking event. You would like to maintain contact, build a relationship and have this person as part of your professional network. You have been holding off making the phone call to invite him/her for a coffee because of the fear of rejection.
Take action - make the call.
If the person makes excuses and gives the impression he/she does not want to meet you, don't take it personally. Work through your feelings about it, let go and move on. If you don't, you accumulate more fear about taking risks in the future.
In July 1995 he launched Amazon.com to sell books online. It was an idea whose time had come because the business grew incredibly fast. Eighteen months later, Amazon.com had $16 million US in sales. He took the company public in 1997. In 1999 he began the process of adding more product areas. The growth has continued. It is now the world's biggest online retailer with three times as many sales as its nearest rival. In 2009, in the midst of the global economic crisis, Amazon.com increased its annual sales by 28% from the previous year with net sales of $24.51 billion.
Why am I telling you this? The courage to take risks is an important soft skill.
Amazing things can happen when we are prepared to take a risk and follow through. It's about trusting intuition and gut feelings. More importantly, it's about trusting ourselves. Jeff Bezos launched Amazon.com not knowing whether it would succeed or not. There was no precedent.
It was Robert Ronstadt who discovered in his work that those who built successful businesses and careers had one unique thing about them - they had the courage and faith to launch their businesses, to take risks in advancing their careers, with no guarantees of success.
This is what risk taking is about - no guarantees of success. It doesn't mean, however, that the risk isn't calculated and well thought through.
What are the Big Career and Business Risks?
* Making a sea change.
* Transitioning to a new career.
* Going back to university and retraining.
* Moving interstate.
* Taking a position overseas.
* For women - starting a family.
* Starting your own business.
* Launching a new service or product range.
* Bringing in a new partner to your business.
* Taking out a large loan.
Taking Risks Day to Day in Your Career or Business.
* Approaching the CEO regarding a work issues that you are not happy about.
* Making a formal bullying claim against a work colleague.
* Negotiating a salary increase.
* Having a crucial conversation with a team member who is underperforming.
* Making a particular phone call where the outcome could be positive or negative.
* Dealing assertively with a difficult client or work colleague.
Soft Skills are as Important as Strategic Skills.
Some would argue that taking risks is more about developing strategic skills than developing interpersonal, communication and people skills, soft skills in other words. Strategic skills are important in implementation. Without highly developed soft skills, however, success is unlikely.
So what are these soft skills that are so important in taking risks?
They are the skills of self-management and self-mastery, those concerned with managing yourself.
* Overcoming the fear and anxiety so you can take the risk in the first place.
* Believing in and trusting yourself.
* Resilience to be able to bounce back from the inevitable set-backs that occur along the way.
* Handling other's disapproval and even derision.
* Continuing undaunted when no one believes in what you are doing.
This demands considerable self-discipline and focus. It also demands persistence and perseverance.
When You Fear Taking Risks, What Do You Do?
When you are challenged to take a risk, there is usually something in the "risk" that deep down really excites you. It is often something that you really would like, but dare not attempt to achieve, make happen or claim for yourself. There is a part of you that dares not dream that it may be possible. There is another part of you that says you would fail anyway.
1. Explore the risk from an emotional point of view.
There is no risk in doing that much (or maybe there is for some people!). If you don't, you are denying and suppressing something deep inside you that is very important to you. You are not even giving yourself the opportunity to see if it may be possible.
Ask yourself:
* Why is it a risk?
* What is the worst thing that could possibly happen if I took the risk and failed?
* How could I handle that in a resilient way and bounce back?
* What would happen to my life, however, if I took the risk and was successful?
* Does the possibility of success outweigh the risk of failure?
2. Inform yourself from a practical point of view.
* Gather all the information you can for and against this particular risk factor.
* Seek out people who can give you information that may allay your fears and concerns - someone who has done what you fear to do, another professional or business owner, a coach or mentor.
* Talk with objective outsiders as well as people who know you well.
3. List the pros and cons.
4. Step back for a while and let yourself process what you have worked through about the risk.
5. After you have given yourself time to consider the risk, make a decision - yes or no.
If you have moved through this process being open and honest with yourself, your "yes" or "no" will be confident and free from the fear and anxiety that was there at the beginning. You will know, without doubt, you have made the right decision for now. That doesn't mean that at some time in the future you may not revisit this. The risk content next time will be far less because of the work you have done this time.
If, however, having gone through this process, you are still anxious, worried and fearful, then it may be that there are "things" blocking you that will continue to create obstacles for you in achieving what you want for your life. You may find it very helpful to talk through with an objective third person who can help you discover and remove those blockages.
"I am frightened of taking risks, but have hopes and dreams that I'll never achieve unless I learn to overcome my fears. Where do I start?"
If you are asking this question, you are more than half way there. You know what you want and need to do and are asking for help and support to do it.
1. Start small.
Take small risks first because every time you take a risk you become more and more confident in yourself and less and less afraid of doing so. If you don't at first succeed, it's not so devastating if the risk is small.
For example, you may have met someone at a networking event. You would like to maintain contact, build a relationship and have this person as part of your professional network. You have been holding off making the phone call to invite him/her for a coffee because of the fear of rejection.
Take action - make the call.
If the person makes excuses and gives the impression he/she does not want to meet you, don't take it personally. Work through your feelings about it, let go and move on. If you don't, you accumulate more fear about taking risks in the future.
Hedge Your Financial Risk
by , under Financial Risk, Identify a Hedge Vehicle, Identify Your Risk, Match the Risk
Your personal or business assets need not be at financial risk. Knowledge of a few basic principles can enable you to plan their protection by hedging. Hedging is the establishment of a financial position which will grow in value - as the value of other assets shrinks.
Gold for example, generally grows in value as the purchasing power of the dollar shrinks. You can solve this shrinking dollar problem - known as inflation - by purchasing gold or silver with dollars. Then, as inflation erodes the value of the dollar, the price of your metal increases, offsetting the loss. Corporations and wealthy individuals hedge their financial risk in this manner and in many cases hedging is the only reason they're still in business - or wealthy.
Hedging can be used to minimize a variety of personal and business financial risks. For example, what would be the effect on your commute or your business if the price of gasoline were to double or triple? Hedging could offset the some or all of the price increase. A delivery business able to fuel its trucks at $2.80 per gallon could thrive if the competition had to buy gasoline for $4.00 - or higher.
If you own stock or bonds in a retirement account, are you comfortable betting your retirement on what might happen on Wall Street? Whether your risk is business or personal, and whether it involves the purchasing power of the dollar or the cost of heating and cooling your home, hedging can provide a solution.
First, Identify Your Risk
You have risk if you own dollars - or expect to receive dollars in the future. Will the dollars you receive as a pension payout have the purchasing power they have now? Similarly, if you own a bank Certificate of Deposit denominated in dollars, your purchasing power is being eaten alive by low interest rates and inflation. Stocks, bonds and mutual funds are all subject to substantial price risk.
Next, Identify a Hedge Vehicle
Gold and the dollar are interchangeable hedge vehicles because their value tends to move in opposite directions. Other hedge vehicles may be less obvious: a trucking company can hedge the possibility of higher diesel fuel costs by buying a futures contract in gasoline or even crude oil. All three are correlated - they move similarly in price. Assets can be hedged by purchase or sale of any correlated physical asset or futures contact.
Finally, Match the Risk
While hedges never perfectly match your risk, close is good enough. For example, if you would like to protect your stock portfolio, it really isn't necessary to guard against the price of all stocks falling to zero. But you may wish to protect against a 20% downward price correction. Hedging can be tailored to either match your total risk or to eliminate only as much risk as you think you have. A property owner who wishes to protect against the rising cost of heating with natural gas, has the option of capping the price at a fixed level or using a more flexible hedge to cover a range of future prices.
Hedging does require some number crunching in calculating and matching risk. And although there are costs involved, a properly designed hedge will outweigh those costs. The exact form of a hedge and its timing should be planned with the assistance of an experienced risk manager.
Your assets are at risk and you can ignore that fact or address it. Hedging will not make you rich, but it can add stability to your finances by letting you maintain the value of what you already own.
Gold for example, generally grows in value as the purchasing power of the dollar shrinks. You can solve this shrinking dollar problem - known as inflation - by purchasing gold or silver with dollars. Then, as inflation erodes the value of the dollar, the price of your metal increases, offsetting the loss. Corporations and wealthy individuals hedge their financial risk in this manner and in many cases hedging is the only reason they're still in business - or wealthy.
Hedging can be used to minimize a variety of personal and business financial risks. For example, what would be the effect on your commute or your business if the price of gasoline were to double or triple? Hedging could offset the some or all of the price increase. A delivery business able to fuel its trucks at $2.80 per gallon could thrive if the competition had to buy gasoline for $4.00 - or higher.
If you own stock or bonds in a retirement account, are you comfortable betting your retirement on what might happen on Wall Street? Whether your risk is business or personal, and whether it involves the purchasing power of the dollar or the cost of heating and cooling your home, hedging can provide a solution.
First, Identify Your Risk
You have risk if you own dollars - or expect to receive dollars in the future. Will the dollars you receive as a pension payout have the purchasing power they have now? Similarly, if you own a bank Certificate of Deposit denominated in dollars, your purchasing power is being eaten alive by low interest rates and inflation. Stocks, bonds and mutual funds are all subject to substantial price risk.
Next, Identify a Hedge Vehicle
Gold and the dollar are interchangeable hedge vehicles because their value tends to move in opposite directions. Other hedge vehicles may be less obvious: a trucking company can hedge the possibility of higher diesel fuel costs by buying a futures contract in gasoline or even crude oil. All three are correlated - they move similarly in price. Assets can be hedged by purchase or sale of any correlated physical asset or futures contact.
Finally, Match the Risk
While hedges never perfectly match your risk, close is good enough. For example, if you would like to protect your stock portfolio, it really isn't necessary to guard against the price of all stocks falling to zero. But you may wish to protect against a 20% downward price correction. Hedging can be tailored to either match your total risk or to eliminate only as much risk as you think you have. A property owner who wishes to protect against the rising cost of heating with natural gas, has the option of capping the price at a fixed level or using a more flexible hedge to cover a range of future prices.
Hedging does require some number crunching in calculating and matching risk. And although there are costs involved, a properly designed hedge will outweigh those costs. The exact form of a hedge and its timing should be planned with the assistance of an experienced risk manager.
Your assets are at risk and you can ignore that fact or address it. Hedging will not make you rich, but it can add stability to your finances by letting you maintain the value of what you already own.
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