How do we determine the risk within the company ?

Risk means a probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action. It simply means threat for loss in company. Risks today will not be the same with risks for future. Next Generation CEO needs to start thinking how risk will mean and evolve in near future. That is why risk topic is crucial.

When I think of an organization, risk needs to get divided into some pieces. These basically would be finance, safety, business, politics and investment. No matter which country you are operate in, the country's GDP, ratings, economy affect you. Another point is that world is getting through tough times with all these terrorist attacks and wars. So, safety of employees in company is essential. Within all these financial, political surroundings, your base business performance is affected for sure. When major projects shift or are canceled, here business becomes a question mark. In all world, there are lots of political changes such as USA, UK, ...etc. Everybody and every company is watching out the updates with full of attention. If you have deep heritage in a country, your investments can be under risk as well. Thinking of all these parameters, I strongly suggest to assess your risk in these categories and come up with a RISK INDEX. That gives you an objective feedback/input when you think of your plans/strategy.

As you may recall, I have a writing about strategy. The risk factor should be merged with your strategy as index so that you can create a dynamic structure for your plans which is crucial for Next Generation CEO. When situation in a country changes dramatically, most of CEOs act with their gut feelings. This change can be a political one or safety one. It is a competency for CEO to guess what to do, how to act within the organization. However when we feel digitalization more in future, there will be risks never happened before. So you need to get ready to build that competency up as first step. Cyber security, virtual organizations, paradigm shifts in technology would be some of the major risks. You have to define them before they become more important.

Once we talk too much on risk, let's not forget that the biggest risk is not taking any risk for business. In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks. When it is time, you have to take some risks to proceed and grow with being aware of that your risk index is integrated to your strategy. There is a well known saying by Albert Einstein: “A ship is always safe at the shore but that is not what it is built for.”

Hakan Özdemir

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