What is positive risk?

There are many definitions of what a risk is, and many different ways of working with risk assessments. Many people find it difficult to focus on the part of opportunities and positive risk – because what is it?

If the impact of an event is negative, then the uncertainty is a threat. However, the uncertainty can also have a positive impact, and then this is an opportunity for the company. Examples of positive risks, or opportunities, can be:

Product development
New markets are opening up
New partnerships are being formed
Technology development
New customer groups

For example, consider a company changing suppliers. There will always be a certain amount of uncertainty associated with this action because you have no previous experience with this supplier. If there are large geographical distances or if you do not have the same native language as the supplier, this uncertainty increases.
Cultural differences and different applicable legal requirements are also factors that play a role. By changing suppliers, there is a risk that misunderstandings will arise that will affect product quality, or that the company's reputation will be affected as a result of incidents at the supplier.

It is common to evaluate each risk based on consequence and probability. Probability refers to the degree to which something is believed to happen. Consequence refers to the effect or impact of something happening.

In QM365 you get an easy overview of the company's opportunities and threats.

Lack of tradition for positive risk

Traditionally, most emphasis has been placed on undesirable events. Many companies find it more difficult to identify and assess the positive aspects of an event. People are used to thinking about reducing negative consequences and protecting themselves against losses. Many forget to think about the opportunities, and it is common for companies to register a much higher number of negative risks than positive ones.

This may stem from what psychologists call bias or skewness in our judgments. We do not always make rational cost-benefit assessments, but often use somewhat cruder rules of thumb. There may be completely insignificant things that influence people's decisions, without us even knowing it.

How to raise awareness of positive risk

The most well-known and most important rule of thumb that we tend to follow, without being aware of it, is what is called loss aversion. Most people hate to lose. They dislike losing much more than they like to win. Therefore, it is probably also natural that we focus on avoiding events that could lead to something negative.

One way to "force" people to also consider possibilities could be to use consequence scales where opportunities are built in . This side of the scale then becomes more visible and people must actively take a stand on what an uncertainty (such as changing suppliers) can lead to in terms of both negative and positive risk.

Below is an example of a consequence scale that considers both threats and opportunities: