The definition of risk varies from source to source. Steinberg (2011:75) defines risk as “uncertainty surrounding a potential event. It is the possibility that something will happen—that is, an event will occur—with a negative outcome.” Lupton (2013:3) describes risk as “deviation from the norm, misfortune, and frightening events. This concept assumes human responsibility and that ‘something can be done’ to prevent misfortune.” Stern and Fineberg (1996:214) define risk as “a concept used to give meaning to things, forces, or circumstances that pose danger to people or to what they value.” Whereas Steinberg focuses on uncertainty with a negative outcome, Lupton describes risk as abnormality with a negative outcome. Stern and Fineberg focus on the concept of danger with an implicit nod to injury should the danger materialize. Note that all three assume a negative result emitting from the danger materializing. I define risk more closely to Stern and Fineberg: “assuming risk means exposing oneself and one’s business to potential dangers”
Known as the Probability and Impact Matrix (PM Companion), risk is assessed along two axes: the likelihood that the danger will become a reality and inflict an injury on one’s business and the measure of severity (impact) one will experience if the danger comes to pass. The following graphic is a simple example of how a Probability and Impact Matrix is implemented. Note that the higher the likelihood of the risk materializing and the higher the impact of injury of that risk on the individual or the organization, the further one moves to toward the upper-right part of the matrix, where the severity assessments are either “medium” or “high.” There are many variations on this theme available in the market today.
Probability and Impact Matrix (PMCompanion, 2022: Online)
Assessing risk is only one side of the risk equation; mitigating risk is the other side. Mitigating risk is one of the core tasks of a business owner. Lutkevich (2023: Online) suggests that “risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a company.” Risk mitigation is usually carried out through a series of actions, such as performing a risk assessment, developing a risk mitigation plan, and implementing that plan (Lutkevich, 2023: Online).
Strategies for mitigating risk include risk sharing, risk transferring, risk avoidance, risk buffering, or risk reduction (RiskOptics, 2023: Online). Conventional wisdom in business is to use risk mitigation strategies, such as purchasing adequate insurance coverage (risk sharing) and engaging in an ongoing risk management effort that assesses potential risks and reduces the opportunity for any single threat to injure the company. These methods are helpful to any business owner, but these methods are godless in that these methods do not assume there is a God who owns all that exists and directs the affairs of humankind.
These methods of managing and responding to risk are not prohibited by Scripture and in some measure, they are supported by Scripture. But they are a godless way to manage and respond to risk. So, in contrast to a godless way of viewing, managing, and responding to risk, I will assert that
- God is impassible, so he is not affected by suffering, dangers, risks and so forth to which biblical stewards are subject in this life.
- God recognizes that biblical stewards will have trouble and risk in this life, but God has overcome those risks precisely because they cannot affect or injure God.
- Biblical stewards are responsible to be faithful to God, and God is responsible for the outcomes of that which God calls a biblical steward to do.
- For a Christian business owner, success is defined as being faithful to God.
- A Christian business owner views risk from an eternal perspective and the safety of the owner’s covenant relationship with God.
- The safest place an owner can be is following God’s directions, even if, in an earthly sense, the owner is assuming a promiscuous level of risk. Even if the owner is martyred, the owner is safe.
- God is always advantaged when God’s plans are realized
- When God asks a Christian business owner to assume risk, God will also call that owner to be strong and courageous, promising God’s presence with the owner as the owner walks an earthly path of risk to obey God’s call.
Future posts will offer support for the points just enumerated.
Bill English, Publisher
Bible and Business
Sources:
Lupton, D. 2013. Risk. (2nd Ed.) New York: Routledge
Lutkevich, B. 2023. What is Risk Mitigation? [Online]. Available from https://www.techtarget.com/searchdisasterrecovery/definition/risk-mitigation [Accessed 10/13/2023]
PM Companion, 2022. Probability and Impact Matrix. [Online]. Available from https://projectmanagementcompanion.com/probability-and-impact-matrix/ [Accessed 11/21/2023]
RiskOptics, 2023. 11 Proven Risk Mitigation Strategies. [Online] Available from https://reciprocity.com/blog/11-proven-risk-mitigation-strategies/. [Accessed 10/13/2023
Steinberg, R. 2011. Governance, Risk Management, and Compliance. Hoboken, NJ: John Wiley & Sons.
Stern, P. C. and Fineberg, H. V. (Eds.) Glossary Term: Risk. In: Understanding Risk: Informing Decisions in a Democratic Society. Washington, DC: National Academy Press
