Understanding the Importance of Risk Management in Film and Entertainment Organizations.
08 January 2019 on Insurance Education
It's natural to feel uncomfortable when taking risks in life and business. While taking risks can create incredibly positive rewards like box office successes, taking risks can also result in disastrous outcomes — like an on-set injury or large financial loss. This teetering balance, between risk and reward, is where deeply understanding risk becomes a powerful tool for entrepreneurs and filmmakers. Thinking about risk management is a thoughtful approach to increase and maximize the rewards that come along with making business decisions; while minimizing or greatly reducing the chance of bad outcomes.
Risk management is a portfolio of tools that organizations use to optimize for positive outcomes by considering and implementing risk avoidance, prevention, reduction and setting aside capital or purchasing an insurance product to pay for negative outcomes that are associated with risk. These tools make it possible to mitigate associated downside risk so that an organization can focus on generating positive growth and business opportunities to succeed.
Some may consider thinking about risk management as an overly cautious approach to business and filmmaking. However, when considering risk through a lens of optimizing rewarding outcomes, risk management becomes a more interesting and useful set of tools to increase your production companies chances for success.
Once it’s understood that risk management is about even more than protecting against downside risks, it’s important to think about how to quantify the possibility of positive or negative outcomes so that you can have the best chance for successful possibilities.
Why risk management in film and entertainment organizations is important & what to know:
Risk is uncertainty about the possibility of outcomes.
Risk management is the practice of preventing, reducing and mitigating negative outcomes to optimize for reward.
Taking risks is important in business and all walks of life because it is tied to rewarding outcomes.
Thinking about business decisions in the context of risk management can assist in making winning decisions.
Hopefully, this post is helpful in understanding that risk is tied to the operation of a business, and to life. To further understand the mechanics of risk see our post The Mechanics of Risk: Uncertainty, Possibility, & Probability.