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News Releases
January 20, 2010
The Lion in the Street by Greg WolfEmbarking on a new year is always a sentimental time for me, reflecting on the past and considering the possibilities of the future. We can live in neither, of course--we only have today, and more truly, only the moment. But, like a roadside pullover near a mountain peak, I appreciate places that provide special vantage points for observation, and rolling into a new year is one of them. The past year has unfolded in some ways that I never could have imagined. And while it seems pointless to even attempt imagining what the new one holds, I am, to some degree, doing just that. Because, even while we can't see what the new year might hold, we can, in fact, do something about it, and even choosing to do nothing is something.
The unknown represents risk. A classic Biblical illustration is found in Proverbs 26:13: "The slothful man saith, there is a lion in the way; a lion is in the streets." He likely could have mentioned a number of other risks, but perhaps the one he chose sounded the most dramatic and therefore provided the most justification for his inclination to not step out into the street. I have no idea how real the risk of a lion encounter might have been--likely not zero, nor likely very consequential. But the point is, the fool chose to do nothing in the face of that risk, and yet in so doing, chose something.
Risk often causes fear. The man above was described as slothful rather than fearful, but I'm sure he expressed some fear regarding the lion--and what would you do if you met a lion in the street? Well, it's hard to tell, but I doubt the man ever had. But he could actually learn quite a bit about meeting a lion before he ever did. He could inform himself as fully as possible, regarding both the likelihood it would ever happen and the consequences if it ever did. Armed with that knowledge, if nothing else, he could make an informed choice regarding his stepping out into the street.
Given uncertainty and the risk it entails, we can really only respond in one of three basic ways. First, we can avoid it, such as the slothful man did. In some situations, it is the best response. The downside of avoiding risk is that the choice itself presents other risks and may be completely contrary to our intended purpose. The old saying "Ships are safest in the harbor, but that is not what ships are for" applies here. The next couple verses in Proverbs 26 speak of both unrest and grief for the slothful man. He did in fact avoid the lion but found some other enemies waiting for him in the street. The second response to risk is to assume it, which doesn't mean to ignore it but rather to accept that it is there and make a choice to not avoid it. We often make this choice when we believe one of two things--either the likelihood or the consequences are low, or both. Third, we can take steps to mitigate risk or trust others to assume it. We often hear this referred to as risk management, although we don't actually manage risk--we can only manage our response to it.
So how should we regard the catalog of risks that we face in the new year? We can start with becoming more informed about the risks we face. Knowledge is a worthy weapon against fear of the lion in the street. That knowledge includes learning about risks we are perhaps unaware of, the likelihood of certain risks, and their potential consequences. For farm and ranch businesses, I have appreciated the work of Michael Boehlje of Purdue University in "A Risk Audit for Your Business," in which he organizes farm business and ranch risk into nine categories to help understanding and responsiveness:
--Business Climate
--Tactical Performance
--Operational Procedures/Processes
--Financial
--Leadership/Governance
--Integrity and Reputation
--Regulatory/Legal and Permit Compliance
--Information Technology and Access
--Strategic Positioning
We also need to have an understanding of our own "risk appetite." Some have a great aversion to risk, and others truly thrive on it, and we are all at different places on that spectrum at different times and in different situations. Understanding this about ourselves helps us find the best response to the risks we face. In one sense, the slothful man was right--there are lions in the street. They range from inconsequential to cataclysmic, such as the Haitian earthquake. In the Proverbs, the making of good choices regarding risk is described as prudence: "A prudent man foreseeth the evil, and hideth himself; but the simple pass on, and are punished." (Proverbs 27:12)
Editor's note: Greg Wolf is a consultant with Kennedy and Coe, LLC (www.kcoe.com) and works to help clients of the firm navigate toward better returns in all areas of their businesses. He is based in the firm's Pratt, Kan., office and can be reached at 620-672-7476.
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