Managing Risk With Melba the Crossing Guard

As an elementary school student back in Bloomington, IN, we had a crossing guard named Melba. A dutiful child, I had crossing the street pretty well mastered. I remember one day, Melba laid into a kid who tore across the street in front of her, she grabbed him and yelled “Don’t you know anything? You gotta Stop, Look, and Listen or you’re gonna get hit by a car.” Blunt and to the point, I think Melba’s iconic advice has applications well beyond the elementary school intersection. There are many things that mitigate the risk of getting hit by a car while crossing the street; including cross walks, street lights, and crossing guards. But one of the most important things, is your ability to determine whether crossing the street you are at is worth the risk in the first place.

Building a business requires taking a risk, no way to get around that. Assessing your comfort with risk and having even a simple risk management plan, can help businesses prepare for and navigate tougher times.

Risk Tolerance and Risk Capacity

To start with it helps to have an understanding of your risk tolerance. This is the level of risk you are willing to take. It’s an emotional or psychological tolerance, what is the impact risk has on you mentally and physically, how much can you tolerate? Does risk make you excited or terrified, are you comfortable with it or does it increase your feelings of stress and anxiety? You must also think about your risk capacity, how much risk can you take on? This is more literal, think about how much are you willing to lose if you take the risk? Matching your risk tolerance and risk capacity, with the kind of business you want to build will make you much happier. If you are someone with a low risk tolerance, a high risk business isn’t for you. Also please don’t judge your risk tolerance or risk capacity. You don’t get more points for the more risk you take, there is no right or wrong, or good and bad. There is only what works for you.


Once you have your business, it’s important to have a simple risk management plan. This plan should doesn’t need to be complicated, but it’s good to be able to do the following things:

Identify your risks and your vulnerability to those risks: What are your risks? A risk could be financial, operational, strategic, or reputational.

  • Financial Risk. How reliant are you on certain clients, contracts or funders for your revenue. If one funder dropped would your business fail?

  • Operational Risk. What would happen if your website crashed, your entire staff quit on the same day, or a pandemic swept the country, what would happen to your ability to run our business.

  • Strategic Risk. What if you launched your business without a business plan or skipped the market research, or started doing work with out contracts or licenses, what would happen to your business.

  • Reputational Risk. What if someone sued you, or your restaurant had an outbreak of salmonella. What if you are discovered to be out of compliance. What impact do these elements have on your ability to run your business

Develop mitigations strategies to address those vulnerabilities.

  • Mitigation strategy samples can include; diversify your revenue and funding streams to avoid financial risk, building alternative and complimentary communication and sales channels to mitigate operational risk, paying for appropriate insurance to cover natural disasters or pandemics to mitigate operational risk, completing market research and securing relevant licenses to mitigate strategic risk, prioritizing ethical leadership to mitigate reputational risk.

Monitor and adapt to your risks, vulnerabilities, and strategies as necessary.

  • Reassess your risks and strategies often. As you are building your business, keep an eye on what is going on, what is changing, how your business is adapting, how the environment you are working in is changing. Are there new regulations, or laws, or peers, or competition, etc.

Melba had it right, we need to stop, look and listen, but then we need to Act. Having a solid understanding of your risks and how to handle them will help you know when you can afford to run across the street, and when it’s better to wait.

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