Every business is fraught with potential risks, whether this business is a huge banking corporation like the Bank of America or Citibank or just a small-sized business like a budding electrical contractor. Risks are definitely part and parcel of running a business and, as such, you should not be daunted by them. In fact, you usually become a great manager the moment you learn to anticipate all possible business problems, whether these problems originate beyond your control or within your circle of influence.
If a problem is within your control, you can prevent its onset. But if it originates from beyond your control, then all you can do is to mitigate its impact. An example of business risk which was beyond your ability to prevent was the stock market crash of 2008. It was beyond your control and you surely couldn’t prevent it. But you could put up measures that could mitigate the impact of such a crisis.
Business Acumen and Risk Management
Business acumen and risk management capability are two interrelated concepts. If you have a reliable business acumen, you would surely have the potential to become a good risk manager. Equipped with a keen business sense, you can readily figure out the potential risks you might encounter if you make a particular business decision. The more you can anticipate these potential problems, the better you can manage your business.
Different Types of Risks
There are many types of risks associated with running a business. First, there are physical risks like an accidental explosion that could cause damage to your business properties and the properties of adjacent businesses. There are also location risks like fires from an adjacent room or building, or damage from natural calamities. Furthermore, there are human risks like a drunk forklift driver who reports to work and causes an accident in the workplace. There are also technology risks like power outage or a glitch in the computer network.
Lastly, there are strategy risks that pertain to potential problems involved in every strategic decision. Hence, at the onset of running your business, it would surely be beneficial to you if you could anticipate all these possible risks. Out of this keen anticipation, you could create a risk management plan to mitigate or prevent the onset of these potential problems.
Ways to Categorize Risks
Risks are potentially just waiting to happen. But in your creation of a risk management plan, you should categorize the different types of risks. To be able to do so, you need to undergo training like IOSH training—a three-day course on how to mitigate and prevent the onset of potential problems. There are basically four categories of potential problems: first, there are those that are very likely to happen; those with some chance of happening; those with small chances of occurring; and those with very little chance of occurring. If you were able to rightly categorize these potential problems, you would surely be very successful in addressing and counteracting all of them.
Your best way to preclude the occurrence of potential problems is to prevent them. If they are within your power to prevent, then by all means, you should always be on top of the situation and stop them from happening. Lastly, you could also take advantage of insurance as your primary safeguard measure against the onset of risks.Opinions expressed here by Contributors are their own.