What it means to actively manage risks

Actively managing risks means being aware of potential problems and taking steps to prevent them or reduce their impact. It involves thinking ahead and planning for what could go wrong, so you are ready to deal with it if it happens.

• It is about identifying risks early, such as a change in circumstances, resources, or timing.
• It means making decisions based on potential risks to avoid surprises or setbacks.
• It includes monitoring risks over time and adjusting plans as needed to keep things on track.

Actively managing risks requires staying alert and adjusting your plans when necessary to prevent failure or damage.

Why and when to actively manage risks

It is important to actively manage risks because risks can lead to problems, delays, or failures if they are not addressed. By managing risks, you can avoid some negative consequences and make sure your plans are more likely to succeed.

Why it is important: Managing risks helps to protect your goals, resources, and time. By preventing issues before they arise, you can keep your progress steady and reduce surprises that might cause stress.

When it is important: Actively managing risks is crucial when you are facing uncertainty, working on a new project, or making a significant change. In any situation where the outcome is uncertain, it is important to be prepared for potential challenges.

Without managing risks, you could find yourself unprepared for problems, which might lead to setbacks or mistakes that could have been avoided.

How to actively manage risks 

To actively manage risks, you need to take some simple steps to understand and control the risks you may face:

• Identify the risks: The first step is to think about what could go wrong. This might include things like delays, lack of resources, or external factors that you cannot control. For example, if you are planning an event, a risk might be bad weather, or if you are managing a project, a risk might be missing a deadline.
• Assess the risks’ impact and likelihood: After identifying risks, consider how big the problem could be and how likely it is to happen. This helps you decide which risks need more attention. For example, if you have scored risks on a scale of 1-5 for likelihood and impact, then you can multiply these scores together to get a combined score of 1-25. The higher the number, the higher priority the risk is likely to be.
• Create a plan: Once you know the risks, think about how you can avoid them or reduce their impact. This might involve finding solutions in advance, like having a backup supplier or rescheduling activities if weather conditions change.
• Monitor and adjust: Risks may change as time passes, so it’s important to check in on your plans regularly. If a risk starts to look more likely, you can take action to manage it before it becomes a problem. It is worth identifying what warning signs you might expect.
• Learn from experience: Every time you deal with a risk, think about what went well and what could be improved. This will help you better manage future risks and be even more prepared.

By staying aware of risks and actively managing them, you can make better decisions, adapt to changes, and reduce the impact of any problems that arise.