An introduction to risk for leaders
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Leaders should make an effort to understand key risks. I read an article about the ongoing COVID-19 pandemic yesterday that helped me better understand the different possible outcomes.
Will South Africa be like Italy in a month from now? Surely we don’t expect to end up with 10,000+ cases of COVID-19 and 90% of the economy on lockdown. But here’s the thing, there is a chance it could happen.
We‘re actually talking about risk. Risk can be defined a few ways, but a helpful definition is that risk is simply the chance that actual outcomes may differ from those expected. We don’t expect our country to end up with schools and shops closed, but there is a risk of it happening.
How big or small the chance of that unexpected outcome is tells us the size of the risk. I wouldn’t cancel a braai if the weather report says there’s a 10% chance of rain. Why? Because I don’t expect it to rain.
But what is the chance that the actual outcome will be different from what I expect? The chance is quite literally 10%. There is a 10% risk that I’m going to have to scramble to let everyone know the party it’s cancelled or maybe move it inside.
Leaders especially should be familiar with risks when it comes to their teams and organizations. I read this article about the pandemic yesterday that helped to increase my understanding of all the different possible outcomes. I recommend all parents, business and government leaders read it too. It’s worth educating ourselves about these important topics.
We‘re actually talking about risk. Risk can be defined a few ways, but a helpful definition is that risk is simply the chance that actual outcomes may differ from those expected. We don’t expect our country to end up with schools and shops closed, but there is a risk of it happening.
How big or small the chance of that unexpected outcome is tells us the size of the risk. I wouldn’t cancel a braai if the weather report says there’s a 10% chance of rain. Why? Because I don’t expect it to rain.
But what is the chance that the actual outcome will be different from what I expect? The chance is quite literally 10%. There is a 10% risk that I’m going to have to scramble to let everyone know the party it’s cancelled or maybe move it inside.
Leaders especially should be familiar with risks when it comes to their teams and organizations. I read this article about the pandemic yesterday that helped to increase my understanding of all the different possible outcomes. I recommend all parents, business and government leaders read it too. It’s worth educating ourselves about these important topics.