Every business faces unpredictable risks like sudden incidents of loss, natural calamities or an organization may shut down permanently. To avoid such risks a company has to put all the efforts to identify and evaluate the upcoming risks which affect the business. Organizations should be well prepared to face future risks, it will help a company in safeguarding their assets and liabilities. In today’s market risk management is a very required plan for the companies to sustain the company for the long run. The risk varies according to the scale of a business, small business faces the risk of wrong management, sustaining in the market and having a successful business, whereas, a big firm may face loss due to failure in getting adjusted to the new market trends or taking wrong decisions.
Some of the types of risks are listed below –
1. Natural Hazards –
These are unpredictable hazards which occur due to change in natural calamities, for example, a building may collapse due to floods or storm, and due to this, a company undergoes huge loss if they do not have any insurance. Natural hazards such as earthquakes or floods may also risk employee’s life, therefore a company should always have a backup plan for such sudden business risks.
2. Technology Risks –
The technology risks can also be called as operational risks that happen due to usage of outdated software’s by a company. Intentionally, any online blockages can be created by any person within the workforce or any outsider. At times company may lose confidential documents and files that may also result in causing harm to the reputation of the company, for example, online theft of the documents and files can be misused by the fraudsters.
3. Strategic Risks –
A company may sometimes, fail in upgrading to the new trends or rules and regulations of the market. The poor or wrong decision may lead to the failure of a company, for example, due to high profits a pharmaceutical company may take a wrong decision of producing the drugs that are banned by the government, because of its ill effects on the people. But because of the profits, a company may still continue its production.
4. Financial Risk –
Most of the companies face financial risks which may result in closing down a company permanently, especially small scale business. The companies may go under huge loss or get bankrupted which may risk in the functioning of a company, there are several reasons like loss in the business, increased debts or sudden downfall in the market.
Methods to have effective risk management plans –
1. Identification of Risks –
An organization should always analyze and identify factors causing risk in the operations of a business. An organization should go through all the records and documents to analyze the upcoming threats or risks in easy flow of the functions of a company. The company should also keep getting feedback on the previous risks and the status of every risk that had occurred. The companies should have repeated meetings with the staff to know the methods used by the workforce in accomplishing the objectives. A company should always be prepared to encounter every kind of risk that can affect directly or indirectly.
2. Analyzing the Risks –
The companies should analyze the reason and impact of the risks occurred. The ways to control or minimize the consequences of the risks have to be evaluated by a company. This can help the organizations in determining the level of the risks and to take over control on those factors.
3. Solving the Risks –
In the process of risk management identifying and analyzing the risks plays a key role in solving the risk factors that may harm the functioning of a company. It helps in the continuity of the business without any loss or damages the reputation of a company.
It is very important for every business to know about the factors that may turn as a risk to a company in the future. Risk management will help the companies in being prepared to face the risks and solve them without encountering many difficulties. By analyzing the risk factors a company will get to know its impact and the measures to take in avoiding such risks.