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6 Types of Positive Risk

 , August 26, 2015 updated on October 18, 2016
Positive risk is the potential that you'll achieve too much of a good thing.
Risk is generally thought of in terms of completely negative outcomes such as financial losses. However, it is also common for businesses and individuals to make exact targets for positive outcomes. In other words, it is sometimes desirable to avoid too much of a good thing. If this is your goal, positive risk can be a useful idea.
Positive risk is a misunderstood and controversial concept. Many individuals are convinced it doesn't exist and firmly believe that risk only applies to negative future outcomes. Nevertheless, the concept of positive risk is firmly enshrined in the risk management practices of many industries. It is an increasingly accepted idea.
The reason that positive risk is attractive from a risk management perspective is that you're often trying to hit a target rather than just trying to avoid something. The following are a few examples of positive risks.

1. Economic Risk

A low unemployment rate is a good thing. However, it is common for policy makers to avoid the positive risk that the unemployment rate dips too low. An extremely low unemployment rate tends to trigger inflation as the supply of workers dries up and employees begin to demand higher and higher salaries to switch jobs.

2. Project Risk

Project Managers manage the risk that a project is over budget and the positive risk that it is under budget. Under budget projects are usually viewed as the result of inflated estimates that potentially tied up resources unnecessarily.

3. Supply Chain Risk

It is increasingly common for supply chains to run on a Just in Time method of inventory control whereby inputs arrive just as they are needed. As such, positive supply chain risks such as early deliveries are commonly managed.

4. Engineering Risk

Engineers may manage the risk that a building won't last long enough. They may also many the positive risk that it is built to last too long. In other words, an office building built to last 10,000 years was likely over-engineered from the perspective of those financing the project.

5. Competitive Risk

A business may want to beat all competitors. However, a business that completely dominates a market may hope that their competitors survive so that they don't attract the attention of regulators who view the business as a monopoly.

6. Technology Risk

In the pursuit to advance technology their are risks that technology could become so advanced so as to be destructive to things that humans value such as culture or life itself. For example, the risk that artificial intelligence will grow to dominate things that humans now control. The potential for machines to become too smart could be viewed as a positive risk.


This is the complete list of articles we have written about risk.
AI Risk
Risk Avoidance
Brand Risk
Budget Risk
Business Risks
Change Risk
Compliance Risk
Concentration Risk
Cost Risk
Country Risk
Credit Risk
Demand Risk
Dread Risk
Economic Risk
Exchange Rates
Existential Risk
External Risk
Financial Risk
Force Majeure
Good Risk
Health & Safety
Human Error
Risk Identification
Infinite Risk
Inflation Risk
Inherent Risk
Interest Rates
Internal Risks
Investing Risk
Legal Risk
Liquidity Risk
Model Risk
Natural Disasters
Negative Risk
Operations Risk
Passive Risk
Personal Risk
Political Risk
Process Risk
Procurement Risk
Product Risk
Project Risk
Pure Risk
Quality Risk
Risk Mitigation
Refinancing Risk
Regulatory Risk
Reputational Risk
Residual Risk
Resource Risk
Revenue Risk
Risk Appetite
Risk Aversion
Risk Examples
Risk Management
Risk Management Process
Risk Matrix
Risk Meaning
Risk Measurement
Risk Taking
Risk Tolerance
Risk Triggers
Risk vs Issue
Risk vs Opportunity
Risk vs Uncertainty
Risk-Reward Ratio
Seasonal Risk
Secondary Risk
Security Risk
Settlement Risk
Risk Sharing
Speculative Risk
Strategic Risk
Strategy Risk
Supply Risk
Systemic Risk
Tactical Risk
Taxation Risk
Technology Risk
Risk Transfer
Unforced Error
Upside Risk
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