Businesses face many risks; risks are events, situations or circumstances which lead to negative consequences for a business.
Risk management focuses on identifying what could go wrong through analysis, assessment and evaluating of risks and implementing strategies to deal risks exposures. Risk management increases the likelihood of successfully achieving your businesses objectives
Tips for risk management
The following are the tips for risk management;
A risk management plan
Develop and implement a risk management plan which describes the potential risks, analyses the impact of each risk and highlights risk strategies to help the business reduce the consequences if the event occurs. Your risk management plans should be regularly reviewed to ensure they accurately reflect current potential risks to the business.
You have to take risks in order to succeed
You have to identify those risks which if occurred will serious impact on the business. The red or warning sign which could give rise to risk exposure include the following among others;
- Relying on few customers and suppliers
- High labor turnover
- Declining profitability
- None compliance with regulatory guidelines
After the risks have been identified, they must be prioritized in accordance with your assessment of their probability. Prioritize risks to see which rank high over the others. This is done in order to come out with appropriate remedial action.
The following remedial actions can be taken on the identified risks;
- Implement mitigation actions on the identified risks. The aim is to reduce risks to lowest level possible.
- Accept some risks because the cost of eliminating them completely is too high.
- Transfer risks to the third party like insurance.
- Eliminate the risk completely by changing the way you produce your product.
To succeed in life we have to be prepared to take risks.
Director Big Drum Advisory Services,