5 STEPS TO MINIMIZE THE BUSINESS RISK

Risk is an inseparable component of every business. No matter how sound the business plan may seem, there is some degree of risk involved in a company. No business can get away with these risk factors, but every enterprise can take specific steps to mitigate them.

5 Steps To Minimize The Business Risk

Here are 5 steps to minimize the business risks.

• Identification of risk

  The first and primary step to minimize a business's risk is to identify the risk. The risk can be of various types. It can be economic, social, political, competitors or natural calamity. The business must identify each risk that it can face shortly. The business should be prepared for potential losses in the most economical way that might arise due to the exposure to risk.

  
  

• Strategies

  Based on the risks your business can face in the environment, you must develop strategies to reduce the risk and its impact on the business. The business can strategize the process or methodologies it will adopt in case the actual risk event occurs. Who is the business supposed to manage, who will be held responsible and so on? Based on these strategies, a full-fledged risk management plan is made for the company. 

  
  

• Action 

  The next step involves the execution of the plan to manage the risks. Under this process, the individuals are assigned work to evaluate the risks and identify the loss exposure. The risk manager must collect data relating to the losses from secondary or primary sources of information. He must take into account the property, liability, human resource, employee and foreign loss exposures. 

  
  

• Monitoring

  To be able to manage and deal with the risk, it is essential that continuous monitoring is in place. Monitoring the environment, social, political, legal, natural, and foreign, is necessary. Many businesses appoint risk managers who monitor the risks the company might face and report them to the business. The risk monitoring must be considered a daily activity by the business and should be monitored and tracked regularly. 

  
  

• Evaluation and Control 

  Once the monitoring department identifies a risk that arises near the business, the risk managers must evaluate it. Evaluation of the losses that might occur, the plan to be implemented to control the damage to be caused and take steps to avoid and reduce its impact. In case, the business fails to mitigate the risk, it must start over again from the first step and perform a more rigorous risk assessment. 

  
  

Every enterprise must take all reasonable steps to minimize or eliminate the risk. Planning and executing the plan strategically by considering the risk factor makes the business less prone to undesirable circumstances. Rather than fretting afterwards, it is better for every business to plan for future contingencies well in advance; as rightly said, 'precaution is better than cure'.