I have just been asked a question on a reply to my posting "Risk Vs Reward - We are told that the more we risk the greater the reward. Only if the risk is a calculated one is this a good motto to live by - Lance Burdett."
José Maria Oliveira asked: please give me some methods, even if they are statistical, or else other risk calculations methods in our own lives in all aspects. As you know, the methods based on terms "historical", eg in previous years are already very old and used, however are used. It would be very interesting and motivating read an article of yours in this sense....
I use a simple template to determine risk if I am emotional about something that I want to invest my time into which takes the emotion out of the equation. This can be done in your head for simple things but for bigger risks should be listed;
Draw a spreadsheet chart then place heading across the top - Objective, Risk, Consequence, Likelihood, Mitigation.
Objective = What do you want to achieve, what is the ultimate aim or aims. List the objectives down in the first column.
Risk = What can occur when you are wanting to achieve your objective, make a list beside each aim.
Consequence = If the risk occurred when you were after your aim, what will happen?
Likelihood = Is the likelihood of this happening Low, Medium, or High. Base this on your experience as much as anything else. You can color code the likelihood with green, orange and red if you want to.
Mitigation = What action can you take, what can you do so that the Risk doesn't happen.
Make the list of all of the possible objectives and all of the possible risks. Think outside the box, come up with extreme examples. This will help your brain to work through the problem piece by piece.
Now look at the chart and ask yourself, is the mitigation going to overcome the consequence, would it reduce or eliminate the risk. If it does then reduce the likelihood downwards.
Now have another a look at your chart and see what could go wrong and is it that bad?
I hope this is helpful.