Evaluating and Managing Risk

Newsletter 17 - 3 February 2005 This is the newsletter for www.mindtools.com. You have received this newsletter because you have subscribed to our double opt-in newsletter. If you are not already a member and you would like to subscribe, please visit http://mindtools.com/testspark.htm. To unsubscribe, please send a blank email to leave-mindtools-9074447I@atomic.sparklist.com. This newsletter is published by James Manktelow of Mind Tools Ltd, Hardwick House, Prospect Place, Swindon, SN1 3LJ, United Kingdom. To contact us, please email newsletter@mindtools.com.

Contents: In This Issue... Risk Analysis Pitch Like a Girl Take Time for Break Time! A Final Note

I hope that as you've reassessed your priorities at the start of the New Year, you've identified and have embarked on new projects. And I hope that at least some of these move you towards goals that are truly important to you. One of the real pleasures of these projects is seeing the first tasks completed and the first results starting to come through. Early success helps to build real enthusiasm, energy and momentum.

However, it is far too easy to focus on the positive sides of things, and ignore the negatives and risks that are a natural part of any undertaking.

Just as early successes can propel a project forward, early materialization of risks can stop it dead. This is why a sound understanding of risk and risk management can add real strength and resilience to your projects, helping you persist when the going gets tough.

This is where it's important to weigh the risks that may be involved and manage the risks involved.

In This Issue…

In this newsletter, we introduce you to a risk analysis framework that helps you better determine the factors that may stand in the way of your project’s success. Using this information, you can also place a value on each risk, which helps you prioritize it and understand its magnitude.

Also, we review an inspirational book, “Pitch Like A Girl,” written by the highly successful Ronna Litchenberg. Subtitled “How a Woman Can Still be Herself and Succeed,” the book is as smart as it is funny, as helpful as it is powerful. In short, it’s a uniquely woman’s way to success in business – and in life.

And applicable to both men and women, we’ve also included some practical advice that will help you feel more relaxed, while simultaneously increasing your ability to focus.

I'd also like to thank the readers who have participated so far in our reader survey. As we said in the last newsletter, we'll be announcing the names of the three $100 Amazon.com voucher winners in one of our March newsletters - there's still time to participate!

And as always, we hope you find the information in this newsletter useful. We look forward to reviewing and implementing the information you shared with us in our reader survey and to working hand-in-hand with you to make our newsletter, which is now sent out twice every month, the very best it can be!

Best wishes!

James & Kellie

Risk Analysis

By James Manktelow & Kellie Fowler.

We’ve all been forced to make hurried decisions, some with good outcomes, some with bad. In the workplace, leaving decisions up-to-chance can be risky, with the outcomes as haphazard as a quick decision itself. That’s why we look at this next important tool, Risk Analysis. Using Risk Analysis, you equip yourself to better make an informed decision, one that has favorable outcomes, including minimized disruptions and controlled costs.

Consider risk to be the perceived extent of possible loss. Using this definition, it’s easy to see how people can have varying views regarding the impact of a risk. For instance, what you believe to be a large risk, a colleague may perceive as a small one - it all depends on individual perceptions, situations and exposures.

To start your own risk analysis, simply sit down and determine the threats facing you or your projects. These may include:

• Human: threats from individuals or organizations, illness, death, etc.
• Procedural: threats from failure of accountability, internal systems and controls, organizational, etc.
• Natural: threats from weather, natural disaster, accident, disease, etc.
• Technical: threats from advances in technology, technical failure, etc.
• Political: threats from changes in tax regimes, public opinion, government policy, foreign influence, etc.
• Project: risks of cost over-runs, jobs taking longer than expected to complete, sufficient product or service quality, etc.
• Financial: threats from business failure, stock market, interest rates, unemployment, etc.
• Others

Use this list as an initial prompt, and then brainstorm other threats that may apply to you or your projects. After doing this, spend time to think through the systems or structures you operate and analyze risks to any part of these.

You may also want to work to identify any vulnerability within these systems or structures and call upon additional resources available to you, including co-workers who may have other perspectives, applicable experiences or important insights.

Next, you work to estimate the risks, or the probability of the threat materializing, and then assess the impact of the threat. To do this, you simply multiply this probability by the cost to you if the threat materializes. This gives you an estimated value for the risk. You can use this value to prioritize risks for individual attention.

Once you have determined the value of the risks you face, you can determine the best ways to manage these, which remains the ultimate goal.

By taking a structured approach to thinking about and preparing for risk, you can go a long way towards anticipating issues and managing problems as they arise. This improves your decision making, as you avoid making decisions that carry excessive risk. It improves the quality of your planning, as you always have pre-prepared contingency plans to manage problems as they arise. And it makes your projects more successful, as you use pre-arranged resources to deal with situations that could otherwise have caused major set-backs.

Find out more about risk analysis and risk management by visiting http://www.mindtools.com/pages/article/newTMC_07.htm. This article elaborates on the information provided here, and then explains how to manage risk.

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Book Review: “Pitch Like A Girl” By Ronna Lichtenberg

Reviewed by Kellie Fowler

Every once in a while, we stumble across something that changes our lives. “Pitch Like A Girl,” did this for me. This gem of a read, written by Ronna Lichtenberg, president of a management consulting firm which boasts an impressive client list of Fortune 500 Who’s Who, is an absolute must for every female professional.

Sharp, witty and fun, this book provides a detailed roadmap for turning vision into reality.

By showing exactly why woman have such a difficult time asking for anything (assistance, resources, etc.) and then providing a compass that gives the precise directions needed for learning how to do so effectively, “Pitching Like A Girl” helps women shatter the glass ceiling without losing their femininity. So if you’re a woman (or even a man) who never seems to feel comfortable asking or self promoting, “Pitch Like A Girl” is for you.

In it, Lichtenberg takes a revealing look at how men and women do business, or what she aptly calls the blue stripe way and the pink stripe way.

Simply put, the pink represents those who form connections before doing business (Lichtenberg uses Oprah Winfrey and Bill Clinton as examples here), whereas blue is assigned to those more concerned with getting a job done (Martha Stewart and Margaret Thatcher are used as examples).

Lichtenberg taps into the most recent developments in brain sex research and social stereotypes to look at how women relate to work and then shows women how to use their natural gifts to get what they want.

She uses humor and her own real-life experiences to instruct women how to better deal with everything from the difficult boss to the trying customer service rep, all the while ensuring they get exactly what you want.

“Pitch Like A Girl” helps readers find their very own pitching style, than shows them how to get a homerun with every hit!

“Pitch Like a Girl” is available at www.amazon.com.

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Take Time for Break Time!

Studies show that managers who take 15-minute breaks every two to three hours and stand-up and stretch or walk outside for some fresh air are more focused and more productive. What’s more, they report lower levels of stress. Now, that’s a desirable side effect!

You can take this a step further. For instance, during crunch time, when nerves are running high and your energy level may be running low, consider trading in high-caffeine or high-sugar drinks for water. Your brain needs a substantial amount of water each and every day to function optimally, so help it out and replace dehydrating high-caffeine drinks with water. If you’re looking for more refreshment, add a slice of lemon or lime.

Eating smaller, more frequent meals or snacks will also help keep you energized, even during the most demanding times. Stay away from trans fats and sugars, though, and opt for good-for-you foods like nuts, low-fat cheese or peanut butter and whole grain crackers. Pair any of these with a piece of fruit or a small cup of yogurt and both your brain and your belly will thank you.

Consider making other small changes to make you feel more relaxed and more focused. For instance, put a nature sounds CD in for the commute to and from work. Or, when you take a break and stretch, follow this with just a few minutes alone in the dark to rejuvenate and sort your thoughts.

As the managers who gave the 15-minute breaks a try, with just a few small changes, you’re sure to see big results!

A Final note from James.

Thank you to the readers who participated in our recent survey. Your suggestions and comments are important to us, as we strive to deliver a newsletter that helps ensure your success.

We are excited about reaching you now every two weeks and hope you will continue to pass on our newsletters to anyone you think will benefit. And, as always, we encourage you to share with us products and services you like and would like to see reviewed, explored or just shared with other readers.

In the next issue, we'll introduce you to PEST Analysis, a simple but powerful tool for understanding the big picture of the Political, Economic, Socio-Cultural and Technological environment you operate in. This is useful for understanding and taking advantage of the powerful forces of change that are affecting our world. It also gives helpful insights into the mindsets of people from other cultures - useful if misunderstanding is to be avoided!

We'll give tips on "Working the Room," something that many find a difficult and sometimes nerve-racking experience. And we'll look at the importance light plays on reducing stress (especially during the long winter months when we cannot get outside as much).

Best wishes, and until next time!

James & Kellie

James Manktelow & Kellie Fowler

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