Part I: Derisking 101: How to identify and reduce risk in your daily work

Train yourself to sense what could go wrong--while you can still shape the outcome.

👋 Hey, it’s Wes. Welcome to my weekly newsletter on managing up, career growth, and standing out as a high-performer.

This week, you’ll learn about how to prevent avoidable issues:

• Two simple questions to ask yourself

• Principles to help you derisk

• Examples of when and how to derisk:

  • Delegating to your team member

  • Building something new

  • Delivering bad news

Read time: 9 minutes

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A few weeks ago, I bought my first outdoor plant.

I’ve accumulated a collection of 90+ indoor plants, but no outdoor plants until now. I saw these beautiful bright purple astilbes and wanted to get five of them for my backyard.

I had a whole vision of a wall full of these flowers.

But a little voice inside me said, “Wes, you’ve never taken care of an outdoor plant. Maybe start with one?”

Well, that turned out to be a good idea. 

The damn thing died in like, two days. I was shook.

Growing plants indoors on the east coast, almost all my plants want more sun if they can get it. But outdoors? I realized there is such a thing as too much sun. Now I know. And I’m glad I learned with minimal heartache from one plant, not five.

There’s a business lesson here: Always try to derisk.

⛑️ Welcome, and thanks for being here. If you’re looking for a sparring partner and external perspective, I typically work with tech leaders on: Managing up to a CEO/SVP, strengthening your executive communication, influencing without authority, and delegating to a team of ICs while raising the bar. If you’re interested in how I can support you, learn more about my coaching approach.

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I’m a naturally paranoid person.

For the most part, I consider this a gift (though to be fair, it can be hard to turn off). I instinctively see multiple paths of how something might play out. This comes in handy when dealing with situations that don’t have a guaranteed outcome—which is most situations at work.

I think my natural tendency to derisk comes from anxiety and laziness. 

I have anxiety about things going wrong. For example, I hate the feeling of being misunderstood; therefore, I think about how to speak as clearly as possible to avoid being misunderstood.

I also consider myself lazy because I don’t want to create unnecessary work for myself. If it’s a problem I can’t avoid, fine. But if I created an issue for myself? That feels like a double loss.

When you derisk, you don’t have to burn your energy on avoidable, obvious missteps. You’ll still make mistakes, but you’ll get to “spend” that effort on better mistakes.

Derisking can be pretty simple. Basically, I ask myself:

1. What’s most likely to go wrong?

2. What can I do to prevent this from happening?

These two questions pretty much cover 99% of derisking on a daily basis. Other questions, like creating contingency plans and “what do we do if” stem from these two simple questions.

Train yourself to identify what might go wrong—while you can still shape the outcome.

1. Embrace a healthy sense of paranoia. 

Personally, I ask myself the questions above all day, every day—it’s subconscious. I have a constant filter humming in my mind of how to shift the odds to a more favorable outcome.

Over time, it doesn’t take much effort because you build up muscle memory. As Andy Grove, CEO of Intel, says, “Only the paranoid survive.”

2. Pattern match to remember what happened in similar situations. 

When you think of a previous situation, your brain remembers tacit knowledge.

For example, the last time I worked with an Upwork freelancer, I wished I had been clearer about the end result I wanted.

After we had multiple calls where he shared too much detail about his methodology for pulling, sorting, and cleaning data, I was no closer to getting a sense of what I wanted to know.

Finally, I kindly interrupted and said, “As the deliverable, I would like for you to say, ‘Each of these pages converted at X% rate.’”

The next time I work with an Upworker, I’m going to think about the previous time, and remember that I should be explicit with what I want.

Ask yourself: Based on the last time I did this or interacted with someone like this, what came up? What should I remember to do now?

3. If you foresee a misunderstanding, speak up and clarify.

Sometimes you can already tell what might become a misunderstanding or cause issues down the line. If you can think of what not to do, share that upfront proactively.

“To be clear, I don’t mean X.”

“By the way, what I’m looking for is Y, not X.”

“I don’t want you to spend hours on this. Spend 30 minutes, and let me know what you come up with. We can check in and see if it’s worth continuing.”

An example from my own work:

I wanted one of my marketing direct reports to do a lightweight branding/messaging exercise. The problem is, “brand doc” can mean a lot of different things and I had something quite specific in mind.

I wanted to reduce the risk that they imagined something different than what I was imagining, which could lead to spending hours creating something we didn’t need.

So I said, “Sometimes a branding/messaging doc can be an intense multi-month process with soul-searching about who we are as a brand, but that’s not what we need at this stage. The problem we have: As we grow, we now have multiple people who are writing public-facing copy, and we’re starting to contradict ourselves with how we sound. I’m thinking the end result should be a 1-2 page doc that clearly outlines the phrases/words we use and don’t use (and why), so everyone who writes customer-facing copy can refer to this. This will allow us to show up in a consistent way with customers, regardless of who wrote the copy behind the scenes.”

More on how to explain yourself well when delegating.

4. Risk isn’t binary, it’s on a spectrum.

Lots of things can be “risky,” but not all risks are equally likely or equally bad. This is why it’s useful to consider the weight of the risk.

You want to think about what’s most likely to be the biggest danger and how likely that is to happen. If you worried about every potential risk equally, you’d never be able to take action. Focus your energy on the most important risks.

Here’s what Aaron Rasmussen, cofounder of Masterclass said about risk when he was looking for a lawyer for his new startup:

Ability to discuss risk as percentages: I’ve found that lawyers will be overly cautious and overly conservative. You have to push hard to get something like a risk percentage for a strategy or tactic. It’s easy to say something carries risk; a great many things do. It’s hard to say how much. You need experience and confidence to give a risk percentage and the knowledge that your client knows that a percentage is purely directional, not exact. It helps us make decisions about what avenue to pursue. This is something that your lawyer should be able to do, not someone else in your organization.

If the stakes are low, you may want to spend less time on derisking. If the stakes are high, come up with a more comprehensive list of risks (and contingency plans) so you can assess the likelihood and impact of each.

5. Use first principles. 

One of my clients was managing an external vendor and felt like she had brought up all possible concerns.

Of course, the vendor fumbled in ways she hadn’t foreseen. She asked me, “How can I know what I don’t know?”

I’ve been in this situation and I don’t think there’s a solution.

Yes, you can research, but depending on the topic, you’re still a relative outsider. When you work with vendors who specialize in a thing, you expect them to be good at what you hired them to do. But sometimes, with a quick Google search, I could answer what my vendor couldn’t.

Call me cynical, but in my experience working with dozens of vendors over the years, I’ve come to this conclusion: I need to manage them tightly.

It’s not a hands-off, set-it-and-forget-it, come-back-to-me-when-you’re-done kind of relationship. So that’s my way of derisking.

Asking myself what might go wrong AND knowing I need to stay on top of the vendor is not a silver bullet by any means.

But once I adopted that mentality, I was able to implement the concept of “trust but verify” and catch potential mistakes as early as possible, which minimized potential negative impact.

Also, you can’t surface every potential unknown unknown. Don’t beat yourself up.

Examples of derisking

Here are three situations where you might benefit from derisking:

Delegating to your team member

Situation: You want your early-career direct report to work on customer case studies.

Obvious risk: The obvious risk is they are newer at strategic work. Up until now, you’ve mainly delegated projects that have been much more well-defined. If you go from 0 to 60 mph expecting them to handle the strategy and execution, they might give you something that isn’t well thought-out and requires a lot of feedback.

Action: When you explain the case study project, check if/how they’re picking up what you’re putting down. If you want them to practice thinking rigorously, ask questions that give them a chance to share (and create a chance for you to fill in gaps). “How are you thinking about which brands to pick for the case study? What’s a good next check-in point to make sure you’re going in the right direction?”

My client was in this situation and didn’t derisk—and their direct report ended up coming back with brands they picked off the top of their head based on who they personally had a good relationship with.

In hindsight, of course, it felt obvious that their direct report didn’t realize that the purpose of case studies is usually to attract more of your ideal customer—not just to write case studies on any brand as the end goal.

My client said, “In the moment when I was delegating, I kind of thought they wouldn’t do it the way I was hoping for, but I didn’t say anything. Next time, I’m going to take note when I feel a mental flag that I should derisk.”

Don’t wait a week before doing a feedback cycle. Get them to share a few thoughts right in that first conversation.

Building something new but it’s unclear if there’s demand

Situation: You have an idea for a project/initiative/program/feature and you’re excited about the potential.

Obvious risk: You have a bunch of hunches and assumptions, but no idea if the idea is worth pursuing.

Action: Figure out the “hard part”—the part where if that doesn’t work, nothing else matters. When experimenting with an idea, I try not to waste time on stuff I know how to do and know will probably work.

I focus on testing the hard part before going all in. This might look like thinking through my logic and doing scenario planning, then seeing if there’s a small way to test the idea. How can you get this in front of real people to get feedback from a small slice of the market?

Delivering bad news

Situation: You need to share bad news with a cross-functional team member.

Obvious risk: The obvious risk is your recipient freaks out, so you need to spend a disproportionate amount of energy to backtrack and reassure them. Or worse: they blame you.

Action: Think about how to frame the news so they understand the situation and minimize the likelihood of spinning out, which is not helpful for you or them. They’re probably thinking “how does this affect me?” so proactively address that.

Avoid incepting negative ideas, because you might turn a molehill into a mountain (or turn a mountain into a bigger mountain). Avoid using stressful-sounding phrases that heighten anxiety more than is necessary. Be mindful of accidentally accepting blame when something is actually not your or anyone’s fault.

By the way, the actual actions above are less important—they are simply examples of how to derisk.

Stay tuned for next week for Part II of how to derisk.

Are there situations in the past where you should have caught an obvious risk? What’s a current situation you could derisk? Hit reply because I’d love to hear from you.

Thanks for being here, and I’ll see you next Wednesday at 8am ET.

Wes

PS Here are more ways to connect:

1. Follow me on Twitter or LinkedIn for insights during the week (free).

2. Check my availability to do a keynote talk for your team.

3. Work with me for 1:1 executive coaching. I find it extremely rewarding to give personalized guidance to ambitious operators. My current clients include leaders at startups funded by Sequoia, Accel, Bessemer, SV Angel, Kleiner Perkins, etc.