Abhishek Rungta

Entrepreneurial life is full of sleepless nights that go into worrying about a score of problems and risks lurking round the corner.

Here is my mental model around risks:

1) 90% of the problems/risks that come up on the horizon, and occupy our mind never end up happening.

We overestimate short term risks. Most of them won’t sink your ship.

E.g.: A client has put forth a demand which will make the project unprofitable. Or, There is a sudden change in a key personnel at the client’s end who is hostile towards your company.

2) You cannot do anything about avoiding some risks.They are not in your control. e.g. lockdown. You can only think of your response to the same that can minimise the effect of the event, if it happens.

3) Most risks have lower impact than we estimate. So do not get paranoid. Chill.

4) We underestimate some of the risks that are not on our horizon (i.e. long term risks).

These are long term, bound-to-happen, obvious risks due to the systemic changes unfolding in our world/industry/business.

Some of these can be detrimental for your business.

e.g. If India’s per capita GDP is set to triple in the next decade, cost arbitrage may / may not work for services exports. How will you respond to that?

5) What opportunities do these risks offer? How should you adjust your strategy and  choices to maximize your chances of success in these emerging situations.

E.g.: Can you promote a talented youngster to give a new lease of life in a business function when one of your top talents decides to move on!

6) Be paranoid and proactive about your long term big risks. Have a clear plan for addressing them.

And keep a cool mind for on-the-horizon risks, by managing the ones which are more likely to happen + have bigger impact, by doing what you control.

Worrying does not solve any of them. Therefore there is no ROI of sleepless nights!