Managing risk in business

by Alexander Beard Group, on Jun 8, 2020 10:31:54 AM

Businesses face many risks. Risks can be external threats or internal weaknesses that will emerge to constrain, damage or become barriers to the growth and success of a business. Risk management should be part of your business practice and strategic management, so that you can address them and increase the likelihood of business success.

The process of risk management will enable you to improve your decision-making, contributing to better planning and prioritisation. Within risk management this helps you allocate capital and resources more efficiently and effectively. You become more able and confident to anticipate what might go wrong, to minimise the amount of fire-fighting you have to do, or in a worst-case scenario, to prevent a failure or serious financial loss.

Overall, using a risk management strategy can significantly improve the chances of you delivering your business plan outcomes on time and to budget.

If part of your thinking is to try something new, like launching a new product or enter new markets, this also needs to be a part of your risk assessment strategy. Competition in these markets, or breakthroughs in technology which make your product redundant, are two risks you should consider in such situations.

Risk management involves methodically identifying the risks surrounding your business activities, assessing the likelihood of events occurring which will have a detrimental effect and growing your understanding of how to respond to these events. Risk management processes can help you put systems in place to deal with the threats and potential consequences. Overall, you should also gain the capacity to monitor the effectiveness of your risk management approaches and controls, building your use of them to be a core part of your business management.