Perfect Risk Management With Smart Solutions for Business
What are the main risks for small businesses? What are the risk control or risk “management” methods? All companies are confronted with risks, obstacles or unforeseen events which are all threats to their existence and development. For minimizing enterprise risk for businesses you need to explore the following options now.
A risk is the probability of occurrence of a negative event and its consequences. Risk management is the implementation of strategies, processes, methods and tools intended to deal with risks. Example of risk: A business manager can have his laptop stolen and therefore risks losing all the data included on his machine (customer file, invoices, quotes, contracts, prices, etc.).
How to get around this risk?
Managing risks first of all consists of identifying and classifying them. It then consists of processing them. Every company must put in place a risk management strategy. However, this is one of the aspects least taken into account by the heads of SMEs.
Manage Risks Well.
To properly manage the risks weighing on his business, the business manager must take the time to carry out an accurate mapping of internal threats and weaknesses. It consists of:
- List and identify all the risks, current or future,
- Assess them, i.e. qualify each risk according to its probability of occurrence, its frequency and duration of exposure, and its potential severity,
- Analyze them: this involves prioritizing and classifying the risks, and planning a solution for each of them,
- Implement actions aimed at reducing risks,
- Evaluate the actions implemented.
The Different Types of Risks
Risks can arise from the business itself or from the external environment. The risks vary greatly from one company to another; they can be classified into different categories:
These are major risks linked to the company’s general strategy and its market positioning. So minimizing enterprise risk for businesses is important there.
The business manager must be on constant watch: he must keep himself informed on the evolution of the market and technologies, by internet or by reading the specialized press. The company’s positioning must be validated or readjusted regularly through market research. Integrating a known franchise network can be a good way to get around strategic risks.
Risks related to corporate governance:
These are the possible problems that may appear in the personal life of the entrepreneur, or in his relations with his associates. It can also concern the composition of the capital and its evolution.
Legal, fiscal, social risks:
These are the risks associated with regulations and their evolution, changes in accounting standards generating a risk of tax adjustment, appearance of new laws regulating a market or a profession (for example taxis, VTC, regulated liberal professions, etc.), changes in labor law, changes in case law. If in doubt about the possibility of accessing a tax or social advantage, do not hesitate to request a tax or social ruling.
Risks weighing on production equipment (vehicles, machines): breakdown, theft,
Risks weighing on IT tools and networks: risk of breakdown, bug, loss or theft of data,
Risks weighing on suppliers, subcontractors, as well as on the supply and delivery chain: out of stock, production and transport delays,
Risks weighing on the internal organization: various factors, sometimes tiny, can disrupt the company and its schedules.
These are the risks related to the profitability and cash flow of the company, deterioration in commodity prices, late payment from a major customer, increase in bank rates, and loss of markets. For minimizing enterprise risk for businesses this is important.