How to Calculate Risk – Skills of the Everyday Badass

Risk is a part of life. We assume a certain degree of risk whenever we choose to grow, expand and develop. Risk often induces FEAR. The way we view and handle risk (and its accompanying fear) is equal to our ability to achieve what is most important. An Everyday Badass achieves in the presence of fear and risk. One way to engage risk like an Everyday Badass is to look it in the eye. You minimize any threats then maximizing the potential of each opportunity to grow, expand and develop. Leaning into an exercise my mentor G. Lynne Snead shared back in our Franklin Covey days, here is my favorite way to manage risk:

First—Identify something you want or intend to achieve. Here are two examples:
I want to purchase a new car that is right for me.
I intend to grow my company by 25% over the next year.

Second—Brainstorm all the different sorts of risks you might face if you venture forward. For example:
I want to purchase a new car that is right for me, but . . .
I might get “taken” by a dishonest salesperson. I don’t want to purchase a car I’ll regret driving. I don’t want to overspend. I want to get good gas mileage. I want the car to last a long time.

Third—Rate the impact of each risk as if you can be 100% certain each will happen. Is that impact high = 5, medium = 3, or low = 1?

Fourth—Rate the possibility of each risk actually happening. Is the possibility high = 5, medium = 3, or low = 1?

Fifth—Now multiply the “impact” score of each risk by the “possibility” score of said risk.

Sixth—Based on the numbers, determine which of the risks are highest and must be mitigated, and which risks you can ignore. Craft mitigation plans and get going on accomplishing your intended goal.

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