(Photo by Eugenia Ai on Unsplash )

Risk management has an image problem.

Most people cringe when they hear the term. They'll tell you that risk management just gets in the way. That it wants you to lock everything down and stand still.

A trader will tell you a different story. They'll point out that layers of risk management practices – both bank-wide and within their group – have insulated them from financial loss while leaving them open to plenty of upside gain.

Traders have the right idea. I usually sum it up as:

Placing good bets is how traders make their money

but risk management is how they keep it.

Placing smart bets

Every decision is a bet on a future outcome. Risk management is about placing smart bets. It's your creative friend who helps you map the path to your goal, marking the tricky spots along the way and pointing out missed opportunities.

You know how improv comedy runs on "Yes, And …"? Risk management runs on "Yes, If…:

"Yes, we can do this … if we manage to secure an extra $5 million in funding, and line up a backup vendor, and interest rates hold steady. We have some control over the first two, so let's explore. For the third, we can map out some contingency planning…"

That creativity has its limits, though. Sometimes your idea is such a stretch that the Yes, If becomes No, Not Right Now – "it would require a sizable regulatory shift, which is unlikely in our near future."

And if your idea is especially wild, that will become No, We Can't Do This At All – "that will only work if the planet starts spinning in the other direction." No one likes being told no, but it's better to find out early rather than managing a crisis later on.

Yes, if …

Risk management can position you to move faster and take smarter risks – the kind that will be worth the potential reward.

None of this is about saying "no" to every idea and standing still. It can't be. The world keeps changing around you, so you need to adapt and keep moving accordingly. Why not choose those moves wisely?

I hope that you'll bring the spirit of Yes, If to your planning and use risk management as your guide.