There are so many ways of potentially mitigating risk that it is impossible to list them all here. However, the starting point would have to be that in order to mitigate a risk, it is first necessary to understand that a risk exists. This requires a mindset, both in life and in business. Obviously, none of us wants to spend any more of our life than necessary worrying and fretting about negative things that could happen. As the saying goes, “shit happens”, but against this, like with anything in life, a balanced approach is required and naiivety is also not a good thing.
having spotted a potential risk, the next step is probably to assess the risk. If the worst case scenario were to happen, what are the possible consequences and what can be done to mitigate that risk. Assessing the mitigation part would also include whether the risk is one which can be reduced by personal, practical action or is it something that needs outside professional support. There are thousands of examples where simply taking personal responsibility and action are enough. Easy examples would be giving up smoking, reducing drinking, changing lifestyle and diet in terms of personal risk.
In business risk, good examples of where outside help may be worthwhile would be where you have a business and have been offered a potentially very lucrative contract. It’s very easy just to see the potential benefits in this situation, but this is a classic “ying and yang” situation. Just as with rights come responsibilities, with reward generally comes risk. So, for any particularly high value or unusual business transaction a good starting point would be to do your homework on the other party to the contract. If more people had undertaken in depth due diligence on Bernie Madoff it is possible that he would have been stopped at least part way through his multi billion dollar fraud.
There are myriad types of legal risks and the essence of using a lawyer is because these people are experts and trained in risk mitigation. Lawyers in particular are trained to think of possible outcomes and risks that others don’t think of, although there is always a balance between assessing risk and ending up with a contract running to hundreds of pages which may not be enforceable in practical terms if the other party is subsequently not worth powder and shot. Businesses who do not assess, for example, health and safety risks in the workplace could end up needing a personal injury and/or an employment lawyer, or even a criminal lawyer if they are not careful.
In summary, risk assessment is a habit. good habits are indispensable, whether in personal life or business life. However, it is also important to have balance, so let’s not become paranoid !