7 Risks Every Business Should Mitigate
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The document outlines seven types of risks that businesses should mitigate, based on Peter Drucker's framework: structural, execution, competitive, investment, integration, misalignment, and governance risks. It emphasizes the importance of effective risk management through identification, assessment, and preventive actions to minimize exposure. Continuous monitoring and reviewing are essential for successful risk management, enhancing business quality and returns.
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7 Risks Every Business Should Mitigate
- 1. 7 Risks Every Business Should Mitigate “Risk is of the essence, and risk making and risk taking cons4tute the basic func4on of enterprise.” – Peter Drucker by Faisal Hoque founder of:
- 2. Peter Drucker Outlined four kinds of risk: • The risk one must accept, the risk that is built into the nature of the business • The risk one can afford to take • The risk one cannot afford to take • The risk one cannot afford not to take
- 4. Structural risk “The fundamental legal and organiza4onal makeup of the business.”
- 5. “The robustness of the business model and how well it is being executed.” Execution risk
- 6. “The ability to sustain compe44ve ac4on and retalia4on.” Competitive risk
- 7. “The ability to manage spending in a business environment where capital is scarce.” Investment Risk
- 8. “The risks of inadequate integra4on between strategy, investments, people and processes.” Integration risk
- 9. “Inadequate alignment between organiza4on and business priori4es.” Misalignmen risk
- 10. “The risks of inadequate par4cipa4on and involvement of management team & BOD on key discoveries and decisions.” Governance risk
- 11. “I have learned that nothing is certain except for the need to have strong risk management, a lot of cash, the willingness to invest even when the future is unclear, and great people.” -‐ Jeffrey R. Immelt, GE How to manage risk
- 12. Three key principles for managing RISKs • Iden7fying the nature of risks inherent in the situa4on. • Assessing the likelihood of the risks manifes4ng themselves. • Taking preven7ve and correc7ve ac7on to reduce the enterprise’s level of exposure to the risk.
- 13. “Risk management is not a one-‐off exercise. Con4nuous monitoring and reviewing are crucial for the success of your risk management approach. Good risk management can vastly improve the quality and returns of any business.”
- 14. About Me Founder of Shadoka and other companies. Shadoka enables entrepreneurship, growth, and social impact. Formerly of GE and other global brands. Author of several books, including Everything Connects – How to Transform and Lead in the Age of Crea:vity, Innova:on and Sustainability (McGraw Hill, Spring 2014) and Survive to Thrive – 27 Prac:ces of Resilient Entrepreneurs, Innovators, And Leaders (Mo7va7onal Press, 2015). Follow me @faisal_hoque. Faisalhoque.com | shadoka.com