Risky Business

All business is risky or so the saying goes. But do risks need to knock you down? Can you actually be prepared for the risks you undertake – especially the risks in marketing?
By definition a risk is an uncertainty, and when it comes to risk there are three main types:

1)Known – Knowns: A known item or situation containing no uncertainty (probability is 100%). You simply plan to avoid these risks.

2) Known – Unknowns: Identifiable uncertainty; risks that can be identified, quantified and for which plans can be made to prevent or reduce the risk. Or the most over used business term: you mitigate these risks.

3) Unknown – Unknowns: Risks that are not yet identifiable or are impossible to predict; no example possible since by definition, you do not know the event. (These are the worst kind by the way.)

Knowing now what we know about risks as stated above, you can manage risk by spending time to create a plan with risk responses. But before you can plan, you need to know what you might be up against and to do that the process is as follows:

1) Identify Risks, (make a list of what can go wrong)
2) Then Qualify (rank your risks by impact and probability)
3) Then Quantify (assign a monetary value to the risk)
4) Then create a response for the risks with the biggest quantifiable impact

Your response will be one of these four options:

1) Avoid the Risk

• Change something to eliminate threat
• Do something extra early in the project to avoid a risk later
• Shut it down, things are going to go badly so pull the plug before you start

2) Transfer the Risk

• Move responsibility to a third party (you can pay someone to take on the risk)
• Understand this doesn’t eliminate the risk, just changes where responsibility lies
• Use insurance policies

3) Mitigate the Risk

• Take actions (the earlier, the better) to reduce probability and/or impact
• Include what precisely needs to be done

4) Just Accept the Risk

• Cannot eliminate all risks, so some simply have to be accepted

Seems simple right? Risk response in and of itself is an entire profession and to squeeze a profession into a short blog is a huge disservice; however, from 30,000 feet those are the fundamentals. So how does this apply to marketing?

When you create a campaign there are always risks and now you know risks can be managed. So ask yourself: have you been acting in a proactive, structured manner to avoid or mitigate the risks or have you simply reacted? Having read this blog, what will you now do differently?