Running a business is risky business, but how do you deal with risks that you don’t even know exist?
Former US defence secretary Donald Rumsfeld once summarised the problem of planning in the face of uncertainty in his famous phrase “unknown unknowns” – things that can have a big effect on us that we don’t even realise we don’t know about.
Once you’ve realised that the map to your future has gaping holes in it, what should you do?
One option is risk assessment. This can be as simple as just writing down a list of all the risks you can think of and then getting people you know or expert friends to suggest others.
Unknown unknowns will always be there, of course, but by listing your risks you reduce the number you haven’t thought about. And simply stating a risk can sometimes help alleviate it, too. For example, in the recent Facebook IPO, the company stated its lack of revenue from its mobile product as a huge risk to its business. Simply making that risk well known is likely to create the concern and attention among Facebook’s shareholders and staff that is needed to actually mitigate the chance of it being a big problem in the future.
Another great idea when tackling unknown risks is to employ the right people. After all, you cannot control what the future will bring, but you can certainly affect which people will be around in your business to deal with it. Having the right staff can mean employing people who can act autonomously, because one risk may be that something happens to you, the business owner.
It might mean getting people with the right skills – so that you’re not the only one in the firm who can perform a certain function. While youth and energy are often ideal qualities in a new hire, future problems might trouble a young traveller much more than a seasoned explorer.
One final tool that is often employed is to turn future unknown risks into something a bit more manageable is business insurance. After all, you may not be able to conceive of all the problems that may confront your business, but the chances are someone has had to deal with them before and that they will be covered by some of the more general terms within an insurance contract.
Whatever risks your business faces, don’t lose sight of the fact that the unexpected can bring good as well as bad. After all, who’s to say that alongside the future risks you face, you won’t also find rewards you weren’t expecting, too?
Barney Jones works for XLN Business Services