Managing business risk

Managing a business is a challenge, and it often involves putting your own finances at risk. Managing business risk reduces uncertainty and protects your livelihood.

Some of the information contained in this article is obtained form Queensland Business and industry website and covered by under Creative Commons Attribution 4.0 International licence (CC BY 4.0).

Risk management is the process of identifying risks, assessing risks and developing strategies to mitigate risks. A risk management plan is an important part of your overall business plan. By understanding potential risks to your business and finding ways to minimise their impacts, you will are giving your business the best chance of long term success.

The Australian standards for Risk Management identifies risk as: ‘the chance of something happening the will impact on objectives’. Therefore the type of risk your business faces is specific you your objectives. The common risks for business are as follows.

Financial risks

Risks include both external risks, such as changes in interest rates or commodity prices, and internal risks such as cash flow shortages, customers defaulting on payments, depreciation of assets.

Operational and environmental risks

These risks cover a range of environmental, human, systems and procedural impacts such as illness or retirement of key staff, equipment breakdown, natural disasters and software failures.

Legal risks

These risks include contractual breaches and non-compliance with regulations such as changes to work health and safety standards.

Strategic risks

These risks relate to your business strategies such as changes in customer demand, increased competition, adopting new technology and pursuing new business opportunities.

Privacy and information risks

These risks relate to non-compliance with state and national privacy laws on recording, storing and disposing of customer information.

You have options

You have may options including: treating, avoiding, reducing, transferring and accepting the risk. Like most human beings we tend to take the path of least resistance, we close our eyes and usually take the path of avoidance. But there is another path.

Transferring Risk

Let’s talk about transferring the risk. We are also great at passing the buck, ever done that? This is where Great Value Insurance comes in. We are actually risk transfers.

We can take care of you by letting you pass the buck and transfer your business risk onto us.

Here is a great article from Oracle Group about the risks involved in operating a business. Very interesting reading indeed…

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