It’s clear that doing business is risky, but not the way it is normally thought, the risk involved in doing business is similar to the risk involved when investing in shares of stock or a new real estate or purchase when a new responsibility is assumed. The difference lies in the loss which you can get by doing bad things without planning, a loss that can lead to the failure of the company.
The business owner may face different types of risks and irregularities in the supply of raw
materials, machinery breakdown, labor disputes, the various fluctuations in market prices, changing trends and fashions, forecast error sales also may be loss of company assets, fires, floods, earthquakes, riots or wars and political instability that can cause unwanted interruptions in business operations. The important thing is to assume that doing business is risky and be prepared to all risks that can occur even for those who deal with natural disasters. Now if you own a small business, you are, by definition, a risk taker, for entrepreneurs risk is part of being free. Ways to minimize risk when doing business:
- Develop a risk management plan
- Identify your risk categories and within each category make a list of specific events and sources of risk affecting its business and market position.
- Calculate the value of the absolute risk by multiplying the probability by the consequence, assign a number of 1 to 5 to each element by its probability of occurrence and also to its consequence. For example if the probability that an earthquake destroys your business is 2 and the result is a level of 5 then the risk is 10.
- List the mitigation of risk factors that have or can put. For example, if the network is secured, the probability of being compromised is a 4 but a firewall protects a level of 2. This reduces the likelihood of risk to 2.
- Calculate each month the amount of money you have available and how long it will last if their income is cut.
- It is not enough to buy standard insurance policies. You must know the specific risks facing their business and insure against them .
- Seek compensation for potential damages caused by other companies or people your business relies regularly.
- Hiring the services of a consultant for internal control.
The risks are inseparable from a business and affect its profitability, both short and long term. Therefore, a strategy for effective risk management is necessary for a business organization successful.
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