What’s your scale for measuring risks? Do you take risks or avoid them? Read through this article. It was specially prepared for you to understand risks and how best you can tackle them.
There is no doubt that there are risks everywhere. Everybody is vulnerable to one risk or the other. We should always ensure that risks are avoided or minimized if they can’t be eliminated completely. In finances, risks refer to the possibility of suffering some form of loss or damage in the financial advents. The below are the exegesis on a viable type of risk and how you may tackle risks in entirety.
Business risks may be taken because of the profit motives. Business owners may accept the risk of loss inherent in the production band distribution of goods and services in a private enterprise economy. Sources of risks in businesses may include but not limited to;
Ø Possibility of change in consumers’ demand
This is very volatile as you may need to focus on your customers demand and make your products consumer-focused. Their demands may change over time due to trends or availability of new and/or better products in the market. You need to know your market structure.
Ø Actions taken by competitors
Your competitors may take some steps so as to make their products outweigh your business’ success. This may be emphasized by introduction of a new recipe by a competitor of food & product research companies.
Ø Actions taken by the government
Sanctions or laws passed out to control the activities of industries may limit their ability to scale through the market pragmatically.
Ø Natural disaster
Ø Poor management
Risk management may be defined as the control of an individual or company’s chances of losing on an investment. A risk can be prevented or eliminated through proper management. Risk management involves protecting one’s property, life and business profits.
Risks may either be insurable or not. On knowing that, we can simply apply the below principles of management to our risk treatment skills;
ü Avoidance or aversion
ü Diversification
ü Prevention after forecast
ü Transfer through pooling of risks
Risk management provides a means for handling many of the risks facing businesses today. If you want to know how to manage your financial risks and how to pools risks, check our trending posts or subscribe to our newsletter to get notified whenever we drop a post.
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