Like it or not, all types of efforts come with risks. Depending on the risks, it can affect your ability to deliver results.

One of the most important lessons I've learned running a company is how limited resources are and how limited your efforts can be. And when you constantly hear complaints, see inefficiencies, there’s pressure to act.

It’s extra tempting when problems come at you left and right, one after another. The more you wait, the more your instinct is to take action.

But that might not be the best idea.

So, the goal of every effort is to increase the odds of success. You do it by managing risks - checking whether your efforts are worth taking.

So let’s dive in.

Decision-makers value risks more than benefits and costs.

Generally, risks are what Finance values the most. It’s making more right than wrong decisions. Avoiding losses is even more valuable to Finance than making more money.

I’ll repeat it again: Finance prioritizes avoiding losses over making more money.

Now, let’s look at the different types of risks. The more you’re able to address them, the higher the likelihood of getting your projects off the ground, both in terms of budget and execution. (You’ll also look like an expert!)

Risk of Failure

What are the chances that your efforts won’t work as intended. It could mean not achieving your goals. This is considered to be the biggest risk of all. You paid for something and got nothing in return.

Some questions to ask for the risk of failure:

• Is the project team set up for success?

• Are they (All parties) capable of executing the project?

• Does the project team have enough bandwidth to work on the project?

Financial Risk

Direct costs are upfront. Are there any hidden fees? You might end up spending more than planned, or worse, get nothing in return.

Is the scope clearly set? If not, you may face scope creep and higher costs.

Opportunity Cost Risk

Opportunity cost is doing one thing that stops you from doing another. Since resources are limited, you can only do so much in a given period.

This is one of my favorites because it exercises your creativity while keeping you level-headed. Is there an effort that’s equally effective but uses less resources?

Vendor Risks

Working with third parties involves inherent risks. You need to trust their ability to deliver, understand your problems, execute effectively, and provide after-sales support.

• Do they have the expertise to solve your problems?

• Do you have good working chemistry?

• Will they still be around in five years?

Reputational Risk

Finally, everything you do within the company affects your reputation. Successful projects improve your reputation incrementally. However, a single failure can ruin all that. So it’s important to view how your IT efforts affect your reputation.

Beyond climbing the corporate ladder, your reputation can help shape and influence projects. You can expect to get things done easier with a better reputation.

That’s all for this week. I hope you learned a thing or two.

See you next Tuesday.

P.S. If you have any thoughts, I personally read and reply to your messages.