Risk Management Strategies to Eliminate Perceived Risk

No matter what industry an individual or business owner is in, making the right decision is a constant challenge. Business owners in the sports industry are often faced with decisions regarding their sports teams or facilities. While athletes constantly ponder over which career path will be best for them.

Regardless of how experienced the individual or business owner might be, the fear of the unknown or what is known as perceived risk regarding certain decisions can hinder the success of a business or career.

We will go over some of the perceived risks faced in the sports industry and risk management strategies to eliminate the perceived risk. But first, let’s cover the concept of perceived risk.

What is perceived risk?

Perceived risk is the uncertainty an individual or business owner faces when poised with the choice to decide on their career, business, or even a purchase decision. This uncertainty usually stems from the fear of the unknown regarding the outcome of the decision.

It’s essentially a fear of “what if the decision or the purchase goes wrong?” What if the choice of career decision doesn’t go as planned? The fear of the outcome of those decisions is known as perceived risk.

Although the name sounds like a fancy business term, it’s a fear that every business owner (sports teams and facility owners included), athlete, or individual faces regarding most decisions, especially decisions with huge impact.

Types of perceived risk

Perceived risk comes in various forms regardless of the individual or business sector. Here are some of the types of perceived risks faced by the sports industry.

Injury risk

This form of perceived risk is usually associated with athletes. Professional athletes are constantly at risk of getting an injury during training or live performance. This risk sometimes hampers their ability to give their all during events and even leads to conservative or health-protective behaviors.

Physical risk

Physical risk comes from a fear of physical harm. It includes the fear that fans might have regarding visiting a sports event venue, especially after having a bad experience. Fans might develop a stigma concerning a particular event or venue if they had a life-threatening experience during their previous visitation.

Functional risk

When faced with a purchase decision regarding sports equipment, sports facility owners constantly fear what if the equipment malfunctions or doesn’t give the desired output. The same can be said for sports team owners. Sports team owners often face fears regarding onboarding new players, especially when they come with a huge price tag slapped on them. Concern about whether the player will fit in with the team or whether they will deliver as expected.

Financial risk

This is arguably one of the most common forms of perceived risk. After purchase, the fear of being without liquidity plagues every individual and business owner. Even when the data suggests that the purchase will bring increased returns down the line, sports businesses are always faced with the dreaded “what if.” What if there’s no money to handle daily expenses. Or what if an emergency comes up.

Social risk

Social risk is more of the fear of being perceived negatively among your peers. It comes in the form of “how will I be seen if I make this decision” or “what will my peers think of me after making this decision.” Sometimes, perceived social risk drives individuals to make the wrong decisions to avoid social stigma.

Risk management strategies to eliminate perceived risk in the sports industry

Perceived risk has been a menace for years to athletes and business owners in the sports industry. Fortunately, certain strategies can be applied to eliminate perceived risk in the sports sector.

Some of them include:

Eliminating Injury risk

Players who have been injured during performances often entertain fears of getting injured again. Fear of not being able to perform as they did before the injury or being unable to recover from the injury.

Professional athletes should be given proper rehabilitative treatment during their recovery process to eliminate this risk. This rehabilitation process can help them gain the confidence to get back on the pitch and give their best.

Moreover, a study among a group of soccer players showed that players who underwent a rehabilitation procedure after an injury had a lower perceived risk of injury when they recovered.

Eliminating Physical risk

Eliminating perceived physical risk can be difficult, especially when the victim has had a traumatic experience. Such experiences sink deep within the individual and can prevent them from participating in the victimizing event in the future.

However, for an occurrence like a fight that breaks out in a sports venue, measures can be taken to beef up the venue’s security and prevent any further incidents that can lead to such occurrences. These measures can help give fans the assurance they need to feel safe in the stadium.

Eliminating Functional risk

Before sports facility owners make a purchase, they are often concerned about the possibility of the equipment malfunctioning. In the case of sports team owners, the concern might be about a prospective athlete not delivering as expected.

One way to eliminate this type of perceived risk is to reassure the sports business of the validity of the equipment or the quality of the player. This can come in the form of warranties for the equipment or guaranteed onboarding and training sessions in the case of an athlete.

You can also site similar successful occurrences in the past that can help eliminate any doubts the owner might have been having. The same goes for athletes.

Professional athletes often have fears about not fitting in or meeting the expectations people have for them when they make a career or team switch. This perceived risk can also be eliminated through personal therapy sessions and guided training to help them believe in themselves.

Eliminating Financial Risk

The thought of not having enough liquidity to take care of expenses in the coming days, weeks, and months can prevent athletes and business owners from making smart purchases or investment decisions. Even when the benefits outweigh the perceived risk, these fears can cloud their judgment.

Nonetheless, eliminating this perceived risk can be accomplished by performing a financial assessment to show the owner or athlete that they and their business will get along just fine even after the purchase. Moreover, you can also create redundancies in case of emergencies to give them that extra jolt of confidence that everything will be all right.

Work with a risk management consultant

Perceived risk has done more harm than good. For most athletes and sports team/facility owners, the fear of the unknown has prevented them from making life-changing career and investment decisions.

Fortunately, by working with a risk management consultant like GUIÓN PARTNERS, athletes, sports teams, and facility owners can finally gain the confidence they need to make wise career and business decisions as they see fit.