Risk factors in Business:
Your kitchen is your business but the potential rodents are your risk. the type of rodent determine that the type of trap to preserve your valuables in the kitchen. your sanity , sanctity and Observation are key to identifying, assessing, prioritize and executing your kitchen risk. You cant kill a fly with a cutlass but you can set a trap for the rat!
Risk is one of the credentials for business success. There is nothing without a risk but the effects of risks are trapped by information, revelation and sensitivity analysis. Not taking risk itself is a risk. The higher the calculated risk the higher the associated benefits and vice versa.
Risk is part of life but we have to learn to take only calculated or informed risks. By this we mean we can only take risks that benefit outweighs their loss or risk with minimal to negligible effects.
Risk management is simply assuring an outcome. Risk management is the process of identifying, assessing, and prioritizing risk of different kinds and creating a plan to either reduce or eliminate their negative impact on business.
The SWOT and PEST analogy is important but objectivity plus envisioned strategy is the baseline. Sufficient knowledge is required to trap risk and clarify uncertainties. This will either position you to either terminate, reduce, accept and/or pass on the risk.
Knowledge give you control over risk and when control is equipped and assured fear is trapped. Information will guide you to identify the severity and frequency of risk so that you can determine what to accept, transfer, avoid or mitigate. A high frequency and high severity rick requires that you avoid such business or pass on the risk via insurance and a high severity with low frequency can also be transferred to insurance. Low frequencies and severity can be handled by operational prowess plus robust and resourceful management skill.
There are severalty of risk types ranging from operational to economic or strategic, legal, personal, benefit realization risk etc.
Some Risk factors in business amongst others include:
1. Fear of failure
2. Ignorance (Trend management incompetence and perceptual gap)
3. Sustaining quality.
4. Poor documentation.
5. Subjectivity (Emotional hiring, power pleasing leadership etc)
6. Internal control weakness that permit leakages.
7. Poor planing execution and weak strategy focus.
8. Workforce incompetence
9. Poor pitched training and compensation plan.
10. Greed (Low values and integrity pollution) and deficiency in market and operational finance)
11. Poor business set up matrix. (Sales and marketing weakness plus publicity error)
12. Impatience and poor service culture.
The reality is that business and risk share same habitat but knowledge and management skill can decide their impact and effect.
Above all, all natural process are with the limit of man prone to error but divine guidance is the surest risk free factor in anything in life be it business, career or vocation, even any sphere of volition or influence. When God is the leading, all errors, risks are already taken care of. No one can be marked exceptional with out Divine Backing.
Business is not for the fickle or feeble. Look before you leap!
Do have a great weekend and equip yourself beyond being a risk victim.