Risk is as old as man and has been an old time acquaintance of businesses. There is no approach that will make risk to go extinct in business environment however; it can be controlled to an appreciable level. As an entrepreneur, you are duty bound to reduce your risk level to the barest minimum if you can continue to make profit. To this end, better risk management strategies are good inhibitors of business failures.
No matter what the sizes are, companies must have an approach to risk management since they can be easily managed when identified. To protect a business against risk, an entrepreneur needs to do the following:
1. Stop activities associated with risk: Activities that brings about risks to an organization need to be stopped. For instance, if a business fund is not separated from a personal fund, the temptation of using the company’s fund for personal expenses will always be there. Quick and unilateral decisions of top members of the management most times pose great risks to the company.
2. Spread the risk: there is no need for the risk to be concentrated on your desk. Spread the risks in form of contracting out some projects/services with a performance bond signed by the contracted firm can help. Sometimes, selling out products on credit to trusted customers can help to minimize the risk of obsolesce and high inventory cost.
3. Reducing risk through better management control: if the pros and cons of running an organization is properly spelt out for management staff, employee and customers etc, certain risks will be averted in the business. Proper management of the company’s data also helps to prevent risk. Hardcopy data can be digitalized and stored by reputable data managers for safety.
4. Insuring against risk if possible: a company need to insure against damage brought about by fire and natural disasters.
5. Apply improved technology: if risks will be averted, modern techniques will be applied in the operation and service provision of any company. This will enhance the business supply chain management hence making service provision to be excellent.
Managing some aspects of our businesses against risks takes automation. This will eliminate a lot of human errors associated with the risks. To be able to reduce risks in planning, monitoring and evaluation, software tools will be a veritable instrument.