Risk refers to a possible event that could cause harm, loss, or make it more difficult to achieve your objectives. It's any possible event that could impact you and your organization's ability to co-create value through your services. If you look around, risk is commonly referenced when there are new projects being undertaken or when there is new installation of equipment. But those are not the only places where there is risk. It is also present in your services. Since a service provider’s goal is to co-create value, you want to minimize risks for your service consumers. Considering it this way, risks are similar to costs. And just like costs, customers will assume that some new risk is going to occur as part of their consumption of your services.

Allow yourself to look back at the 2-part article on Outcomes, where ride-sharing apps such as Uber and Lyft were used as examples. If you were a customer using the app to get rides all over a big city such as New York, you remove the risk of not finding a parking space for your rental car since the service removed your need to have your own rental car in the first place. But, you now run the risk of not being able to call an Uber or Lyft if your phone’s battery dies or there were sudden outages from Uber's or Lyft's side. These are risks got introduced into your desired outcome of traveling around New York. However, as a consumer of the service, you can also contribute to reducing the risk by taking some mitigating actions. For example, you can carry around a portable power bank to charge your battery when it’s not quite possible to find a power outlet let alone a charger. By doing this as a consumer, you reduce the risk that you won't be able to call for an Uber or Lyft when you need one.

Also, you may want to provide feedback to the ride-sharing company about the difficulty in using their service in more rural areas or that they need to get more drivers to join their existing pool. The more consumers such as yourself communicate with the service provider about what you need or require, they will find it easier to better meet those needs and requirements.

Now, since it is a service relationship, there has to be clarity in communicating the desired outcomes of the service consumer. But like any human relationship with a two way street mechanism, the service provider also can put requirements on their customer too. In the example of the ride-sharing apps, they require customers to have a smartphone, a valid data plan, and the ability to send your GPS location to their drivers by using the location tracking feature on your phone. Again, both the service provider and service consumer have to work together to co-create the value and reduce the overall risk.

Since risk is a possible event that could cause harm or make it more difficult for both the service provider and consumer to achieve their objectives, both can do some things to mitigate that risk. There are 4 things that can be done with risk: avoid it, accept it, transfer it, or mitigate it.