What is Risk Management?
Risk Management is to acknowledge risk happens and to take the necessary measures to ensure you are prepared for it. Is your business ready? Every business owner should make sure there business is risk ready. Here are some common risks your business may face.
Strategic risk emerges when a business does not operate according to its business model or plan. When a company does not operate according to its business model, its strategy becomes less effective over time and it may struggle to reach its defined goals.
Business owners should brainstorm possible risks and ask themselves how to mitigate these risks. This helps you to stay on track and keep the list up-to-date and accurate.
Financial Risk is one of the biggest responsibilities a small business faces and worries about. Oftentimes, business owners use their life savings or take out loans to get their business running. This puts a huge pressure on them to recoup their investments. Also, financial risks can arise from unforeseen events such as a pandemic, natural disaster and/ or market crash.
Keeping track of cash flow will be an important factor in running a business. Make sure that you know how much is coming in and out and what adjustments need to be made for the unexpected.
Operational Risk is anything that affects the day-to-day running of a business. These risks are often due to interruptions, damages, external events, etc. Business owners should consider gaining a better understanding of their operational risks and find the most effective steps to get somewhat to normal.
Small businesses face a number of risks just like big companies. However, they are more vulnerable because they don’t have the vast resources. Planning, managing and knowing those risks can help a business survive if things don’t go as planned.