Management of risks in business

Management of risks in business

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

 risk is like fire

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.

risk mangt

You have to take risks in order to succeed

 ship is always safe at shore

Risk identification

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

Risk prioritization

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.

Remedial actions

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.

Conclusion

To succeed in life we have to be prepared to take risks.

the most dangerous risks

Author: 

John Muhaise-Bikalemesa,
Director Big Drum Advisory Services,
john.muhaise@bigdrumassociates.com

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