In this episode, I have an insightful conversation with Nate Ramanathan, Vice President of Operations at AEye, Inc. and a serial entrepreneur. Nate shared some valuable advice about preparing for risk in times like this when the COVID-19 pandemic has created massive disruptions in businesses around the world. Right from when he got word of the virus in December, Nate said he started making preparations—calling his Chinese suppliers, asking them what their plans were, and planning for alternative supply routes. While it may have seemed paranoid at the time, it paid off when China went into a complete lockdown and AEye faced no delays or disruptions.

Nate shares that going through disruptions like the dotcom bubble, the 2007 tsunami, and the mortgage crisis have taught him that things can change in a day and that businesses always need to be prepared. In a globalized world, we must be prepared for geopolitical risks—where events in one part of the world can have far-reaching consequences in other regions. That’s why when he looks at a product, Nate immediately identifies the risks in the supply chain and prepares for the worst. Business continuity, which is his term for effective risk management in business, is of utmost importance to him.

Nate states that scalability is what makes an invention valuable to humanity. Only when an invention can be scaled up can it be of service to many people. With scalability, of course, comes the need to manage risks efficiently. I asked him about how to build resilient business models that can weather any storm. Here are some nuggets of advice that he offered:

- Be aware of geopolitical risks

- Learn from your experiences. Nate said that people will either forget about the COVID-19 experience or they will build better systems and be better prepared for similar (or worse) situations in the future.

- Prioritize risks. Nate follows the Failure Mode & Effects Analysis (FMEA) template. He recommends putting numbers to the Occurrence of an Event (the likelihood of it occurring), Severity of the Event (what effects it will have), and Detection of the Event (if it can be predicted and negated).

- Balance passion and risk management. Start-up founders and inventors tend to be passionate and eager to make their businesses grow. It may be undesirable to burden them with risk management since it may take away their spark or they may become defensive of their product.

Nate also shared some great insights on how intrapreneurs, who lead spinoffs of larger companies, should approach business:

- They need to have the mentality of a large corporation and the flexibility of a start-up.

- They should have similar incentives as investors.

- They need autonomy from the parent company to be able to grow and create independently.