With the pandemic, businesses could be facing a whole new range of potential risks. You should strive to understand the risks in order to be able to protect your business.
Risks are part of everyday business life and when it is fully understood, business owners can proceed to make certain decisions with the awareness of this risk which helps them make better decisions.
Business management risk is one of the most important risks you should plan for because it can affect your financial performance and reputation.
Running a business comes with its own risk, it is important that every business owner make plans for the associated risks. Each aspect of the business comes with its risk, it will be smart for business owners to make plans for the risks. It is also important to understand the evolution of the risks and how they impact one another.
The Business management risks are
Strategic risk Management
You need to be strategic in making certain business decisions, and focus on balancing risk in comparison to rewards. Be conscious of the fact that as much as certain decisions could set you on the path to achieving your business goals, it is possible that some decisions can have a negative impact on your business. Bad decisions could lead to an array of challenges that can keep affecting the business negatively. You should also understand that beyond making decisions, you should also work hard at the execution of those decisions.
Compliance (Regulatory) risk Management
There a couple of legislation and regulation that guides businesses, they have certain responsibilities either compulsory or optional. For example, in Nigeria, businesses are regulated by the Company and Allied Matters Act (CAMA) with the Corporate Affairs Commission (CAC) as the government agency that is responsible for regulating the formation and management of companies in Nigeria. While some regulations might be peculiar to certain sectors, others might be general, and failure to comply might attract certain consequences such as fines, penalties, and the like, and it can also be damaging to the business’s reputation.
Technology/security risk Management
Technology risk management is a process that identifies, assesses, and monitors risks to the business.
It involves the identification of risks, the evaluation of risks, and the implementation of controls to manage these risks.
The term “technology risk management” (TRM) has been used interchangeably with “cyber security” in recent years
Financial risk Management
Businesses are also at financial risk, they need to plan in order to manage the cash flow. In order to mitigate the risks, a business owner should devise a means to ensure that the business is solvent. Planning for financial risks could involve devising marketing means that can sustain the business so that there will always be customers to buy from the business, that way you do not have to rely on one or two customers that could stop buying at any point.
Also read: WHY IS DATA IMPORTANT FOR YOUR BUSINESS?
Reputational risk Management
When a business is poorly managed, the business usually performs poorly. This not only affects the performance of the business, but it also takes its toll on the reputation of the business. Businesses should strive to avoid anything that puts the reputation of the business at risk, they should ensure they have more control over what and how information is shared; ensure that all deliverables are met and customers get quality service at all times.
Operational Risk Management
Operational Risk is associated with the day to day running of the business; daily operations can be dependent on a number of risk factors. Events like fire, natural disaster, human error or inappropriate staff behavior, systems failure, fraud, and embezzlement of funds are usually unexpected but they constitute great risks to the business.
Physical risk Management
This involves hazards that could be a threat to the physical assets a business has, the assets could be the building, equipment, and people – be it the staff or the customers. Physical risks can put your business through damage if not properly managed. For example, you could be facing a huge repair cost if there any of your equipment is damaged.
While the risks mentioned above are not exclusive, they are the major type of risks. There are other risks that a business can face, understanding the risk and knowing how to compare the risk versus reward won’t just protect businesses, it will also help the business get prospective new customers, new products and services, and insight on the overall business operation.
A risk management plan is essential for any business. It helps you deal with the risks that can arise, and hopefully eliminate some of them. While there are many different types of risks that a company may face, planning ahead is key to keeping them at bay as much as possible.