#LaunchPadJ2B - Quit Your Job & Start Your Business Series - 21

Every business faces risk at some point or another which hinders its success. Taking risk in business is imperative. Risk is defined as the probability of an untoward incident and its consequences. Risk management is the practice of using processes, methods and tools for managing these risks.

Running a business also means protecting your business, managing risks & having a risk management plan in place to face adverse situations. Managing risk requires identification of scenarios that may or may not happen & strategies that would be implemented in case of adverse situations. Businesses that calculate risks & protect their losses are better prepared for their future. A successful business identifies risks and has a cost effective way of dealing with such situations. They have a contingency plan in place.

Steps needed to protect your business would be:-

1. Identifying risks to the business
A business can face numerous risks such as financial risk, operational risk, compliance risk or strategic risk, health and safety risk or environmental risk. A lot of effort needs to be put in identifying the types of risk a business may face.

2. Analyzing the level of risks

To analyze the level of risk we need to work out the probability of the risk happening and the effect it would have on the business.

Level of risk = consequence x likelihood

Level of risk is often described as low, medium, high or very high. It should be analyzed in relation to what you are currently doing to control it. We need to keep in mind that control measures decrease the level of risk but do not eliminate it.

3. Evaluate the risks

After identifying the risk we need to rank them to evaluate. This can be done by studying the probability and consequence of each risk and segregating them as high, medium or low. Prioritizing risks allows us to direct our time and money towards the most important risks. We can put systems and controls in place to deal with the consequences of an event.

4. Contingency and Recovery plan

Prepare a recovery plan which will be decisive in helping your business survive if one of the risks that you've identified does occur. Risk management involves putting processes, methods and tools in place to deal with the consequence of events you have identified as major threats for your business. This could be something like setting aside capital to ease cash flow problems if they arise or ensuring efficient computer backup and IT support to deal with a systems failure.

We need to choose the right insurance to protect against losses. Insurance will not reduce the risk but it can be used as a financial tool to reduce losses due to the event. Be prepared to face the challenges of the future.

While taking risks calculate & protect your losses.

Keep in touch.

Be Unstoppable 👍🏻

- Sincerely Yours
Success Coach Nilesh
Branding - Marketing & Growth Strategist for Professionals, Executives & CEOs

See more at my website: www.SuccessCoachNilesh.com 

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