Handling Risk Efficiently


Handling Risk Efficiently

Risk assessment is all about the potential return. First, the potential return has to be significantly higher than the cost of failure. Second, its important to examine whether or not this application or project is within the core expertise of the company. If so, then the odds of failure are low, and if not, then the potential return better be significant, or it should not even be considered .

A prime example of a risk handled efficiently by our company occurred just a few years ago. One of our largest customers came to us and ask if we would be willing to take on a very large e-commerce and logistics software development project. We had previously competed for the project and had lost to a competitor that subsequently failed miserably. On paper the competitor was imminently more qualified to do the project than we were. Through mismanagement and failed expectation setting, they had not succeeded and were now being sued by this Fortune 100 customer. At the time, AccuCode employed exactly one full-time programmer. We had never done anything like this project before. If we succeeded, it would forever change the face and future of my company and deliver the biggest profits in company history. If we failed, it would probably put us out of business. Our odds of pulling it off were slim. However, I personally had some ideas for the project that the customer liked and I had convinced them that we could probably accomplish the project. To seal the deal I offered them a no risk proposition: If we failed to deliver the first milestone, on-time and on budget, I would refund 100% for their money. If that happened , I would be out of business. The customer accepted. I recruited the development team over the next three weeks and we delivered. The customer was delighted , and today over half our staff and our revenue comes from software projects similar to this one. I knew that this is the direction in which I wanted to take the company and I knew that without a successful software component to our offering we would never reach our true potential. And therefore I seized this opportunityand the risk associated with itas a chance to redefine my company, and it worked better than I could have ever hoped.




Inside the Minds Stuff - Inside the Minds. Managing for Profit. Leading CEOs on Key Strategies for Increasing Profits Exponentially in Any Economy
Inside the Minds Stuff - Inside the Minds. Managing for Profit. Leading CEOs on Key Strategies for Increasing Profits Exponentially in Any Economy
ISBN: N/A
EAN: N/A
Year: 2004
Pages: 130

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