Whoever said that risks can be totally eliminated has never been disillusioned ever. Risks are imminent whether we are talking about our personal lives or professional ones. It is easy to say that a life without risks would even be boring because then we would have no fun in conquering our weaknesses and proving ourselves each time.
There are a lot of tools that are devised to assess risks in management as well as the personal setting. The most popular one is called the SWOT test. The acronym stands for Strength, Weaknesses, Opportunities, and threats.
A detailed analysis of your corporate status according to the SWOT matrix can tell you a lot about your company. It is a real test but a lot depends on the way the test is approached. Because the test is a self-approached, there are chances that some of the strengths and opportunities are overbearingly given importance and the weaknesses and the threats are not properly addressed. With time and practice, the skill to assess according to the SWOT format also improves.
It is important to be realistic rather than be an escapist:
There is no point really in having a flattering SWOT analysis because it defeats the purpose of actually taking this exercise. The test is to determine not just how good the strength of the company is but also to determine its weaknesses and the threats.
Albert S Humphrey is universally believed to be the father of this test. The test is also widely used as an ice-breaking tool in any organization or meeting and is a way to warm up the members of a group. At the corporate level, this is a serious strategizing tool to assess the risks that are prevalent in a particular industry.
SWOT can also help become better than competitors:
Identifying the company’s strengths and weaknesses is a natural progression towards self-awareness and can help in eliminating competitors. It is a powerful tool to distinguish yourself from other competitors and helping you gain a foothold in the areas where they lack.
Apart from this test, there is also another test called the PEST analysis which stands for the political, economic, social and technological analysis. This is more analytical than SWOT however it has not surpassed the former in popularity.
The SWOT test is sometimes referred to as the internal-external test also because the strength and the weaknesses are more often the internal factors whereas the opportunities and threats are mostly the external ones. For this reason, the SWOT matrix is also referred to as the IE matrix.