Risk Management Process: The Waterline – Java With Jim

by Nov 22, 2021Advisory Groups

The third management secret of the lazy CEO is Risk. Specifically the risk management process. And this is going to correlate to delegation, which we’ll talk about a little bit later, but whenever we’re dealing with an issue, there are really only two kinds of risks that you need to think about. And the risk is either above the waterline or below the waterline. So the story goes like this. If you’re a commander of a ship in the Navy and you know, you got to attack and a torpedo or a missile hits, hits the boat, but above the waterline, you go, all right, that stinks, but we’re going to fix it. We’ll be fine. Right? The hits below the waterline, you know, all hands on deck, we got a giant problem on the hand, we could go, we could be going to the bottom if we don’t deal with this right away.

So the risk in your business is the same way. Most of the risks that you’re exposed to would be above the waterline type of risk. Like it would stink. It’s not going to put me out of business. There are once in a while, issues that are below the waterline issue in terms of risks, you need to handle those differently. And so you just want to be, when you’re thinking about how hard do I want to push on this issue? How much can I delegate here? How involved do I need to be? Just do that little analysis? Is this an above-the-waterline or below-the-waterline risk? Now look for those of us that are in high control. And this is hard because we want everything to be as close to perfect as we can get it to, but that’s not how you develop your people.

So you need to think about when can I actually let loose just a little bit, and when I need to keep that tight grip. And the answer is above the water line below the waterline, below the waterline issues, stay tight with them above, or give it to somebody you trust like your brother or sister above the waterline might be a learning opportunity, but you know, I’m not going to die if something goes wrong. Okay. So think about that when you’re running through risk situations and like how much involvement do I need on this one?