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Rachel Finley
574 TNRB
Brigham Young University
Provo, UT 84602
(801) 422-3598
prspecialist@byu.edu

Risky Business Isn’t Always Bad Business

Taking risks is part of life for Alan Chipman, who shaved his head to play Daddy Warbucks in a community theater production of the musical Annie—without telling his wife first.

“Risk isn’t necessarily bad,” said Chipman, senior manager of systems and process assurance with PricewaterhouseCoopers, in his e-Business Lecture series presentation. “You have to ask yourself two questions: does the reward outweigh the risk, and can you minimize the risk to an acceptable level?”

Aside from risks in show business, Chipman specializes in assessing risks involved in business ventures. “Risk in an important factor in business,” he said. “It’s anything that may impede an organization from achieving it objectives.” Of the many types of business risks, Chipman identified five categories that apply to all forms of business: finance, technology, opportunity, personal, and legal. He discussed the first three in greater detail.

The first risk, and perhaps the greatest, is meeting the bottom line. Financial risk is inherent in every form of business; there are risks involved in researching investments, fulfilling economic responsibilities, being liable to customers and manufacturers, and balancing supply and demand, he said.

Technological risk is the second category. Most technology has a shelf life of eighteen months, Chipman says. And that poses a serious risk to cutting-edge, technology-driven businesses. Such businesses must be able to create a demand for the product and produce and ship it before it becomes obsolete. Companies that depend on technology must consider compatibility with existing technology, functionality, security as well as patent infringement, Chipman said.

Finally, the risk of opportunity entails finding investors, forming relationships with vendors, marketing the product or service, and creating or reading the market demand.

Chipman recommended students familiarize themselves first with general business risks and then with specific risks involved in e-business. The greatest risks for Internet-based, start-up companies, which make up a large part of the e-business industry, include being able to reach the consumer, securing payment methods, safely storing data, and operating effectively online. Even with such specialized concerns, a general understanding of business risks and managing them is the best place to start.

“Whether bricks and mortar, or e-business, there are some aspects of business that just don’t change,” he says.