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How To Manage Business Risks

Aug 17, 2007
In spite of the fact that all small business owners face high risks, the risk factor in small and big businesses is the most overlooked area. Risk minimizing is crucial, even though taking risks in business and winning on risky gambles can be fun. It is the same in any venture that involves risk. Businesses both small and big need to deploy good risk management processes. They should have a system that manages business risks continuously through processes such as risk analysis and risk quantification.

When one does an internet search for risk management techniques and processes, there are a number of links given by search engines. Some of the typical subjects that result from such internet searches are insurance, OSHA standards, financial safeguards, issues related to environment protection and sustenance, government legalities, and computer back up systems. All of these are risk control systems and are specialized topics for risk control. However, they do not help a business to identify risks.

The Five Fold Risk Management System

For any risk management system to succeed, business owners and managers must take steps to ensure that everythinh involved in the risk management system is followed comprehensively. Risk management requires adherence to these five steps: identifying risks, quantifying them, making strategies to contain risks, formulating and implementing strategies conscientiously and monitoring risk containment tasks continuously.

Complicated though it may seem, for any business, especially small businesses, to manage risks well, they should follow the five-fold management system. A good starting place will be with the business plan itself. Reading through the business plans with a person who has a professional view will give one a comprehensive understanding of the risks involved. A good strategy will be to think of yourself as a bank official deciding to finance your business. You will then be able to identify financial risks associated with your business.

Although not every risky situation can be anticipated, it will be good for those concerned with risk management in their respective business to do a good brainstorming session. If you do this, there will be very few risk related business situations that will really surprise you.

There are many consultancy firms that you can go to for the risk management of your business. You may also obtain computer software solutions to identify business risks for your business and minimize them. Such software is a good support solution if you are doing risk management for yourself. This software is tailored to small and large businesses alike. It can be quite costly if you are outsourcing your risk management solutions.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com.
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