What are the various types of risks associated with the business
Created on 09 May 2020
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Updated on 29 Aug 2020
What are the various types of risks associated with the business?
Running a business requires a lot of work, which can reap customer rewards, revenue, and satisfaction. Although success is the ultimate goal, business risk can prevent you from achieving your defined goals.
However, when it comes to risk management, you can take steps. Here are seven types of business risk that you may want to address in your company. There are many types of risks related to business and all are interrelated and complementary to each other. So let's start with the economic risk:-
The economy is constantly changing as markets fluctuate. Several optimistic changes are good for the financial system, which leads to increasing trade environments, while harmful events can reduce sales. It is important to observe changes and trends to identify and potentially plan for an economic downturn.
To combat economic risk, save as much money as possible to maintain stable cash flow. Also, operate with a lean budget and low overhead in all economic cycles, as part of your business plan.
As these types of risks are overcome the next hurdle stands as Compliance risk
Entrepreneurs face an abundance of laws and regulations to comply with. For example, recent data protection and payment processing compliance can affect how you handle certain aspects of your operation. Getting well versed in the applicable laws of federal agencies such as the Occupational Health and Safety Administration (OSHA) or the Environmental Protection Agency (EPA), as well as state and local agencies, can help to minimize compliance risks.
Failing to obey can result in important fines and penalties. Stay vigilant in tracking compliance by joining an industry organization, regularly reviewing information from government agencies, and seeking assistance from specialized compliance consultants. As one overthrows these types of barriers then the next step is followed as Security and Fraud Risk
As more customers use online and mobile channels to share personal data, there are also greater opportunities for hackers. The news about data breaches, identity theft, and payment fraud illustrates how this type of risk is growing for companies.
This risk not only affects trust and reputation, but the company is also financially responsible for any data breaches or fraud. For efficient company risk management, focus on security solutions, fraud detection tools, and educating employees and customers on how to notice possible harms. When the security risk is overtime comes to protect the finance to manage the business with Financial risk
This business risk may involve extended credit to customers or a debt burden from your own company. Interest rate fluctuations can also be a threat.
Making adjustments to your business plan will help to avoid harming cash flow or creating an unexpected loss. Keep debt to a minimum and create a plan that will begin to ease that debt load as quickly as possible. If one depends on all of its income from one or two customers, your monetary risk could be important if one or both of you no longer use your services. Start marketing your services to diversify your base, so that losing one doesn't destroy your results. When money is successfully protected then the time comes to protect the reputation.
There was always the risk that a dissatisfied customer, product failure, negative press or legal action could negatively affect the company's brand reputation. However, social media has expanded the speed and scope of reputation risk. Only a negative tweet or a bad review can decrease the customer's followers and cause a drop in revenue.
To prepare for this risk, take advantage of reputation management strategies to regularly monitor what others are saying about the company online and offline. Be ready to respond to these comments and help resolve any concerns immediately. Remember quality to avoid lawsuits and product failures that can also damage your company's reputation. Now the main functioning takes place after securing the reputation of the operations of the business.
This business risk can occur internally, externally, or involve a combination of factors. Something unexpected can happen that causes you to lose business continuity.
This unexpected event can be a natural disaster or fire those damages or destroys your physical business. Or it may involve a server outage caused by technical problems, people, or power failure. Many operational risks are also related to people. An employee can make mistakes that cost time and money.
Whether it is a malfunction in public or the process, these ready risks can harmfully impact your business in terms of money, time, and status. Address each of these possible ready risks through training and a trade continuity plan. Both tactics provide a way to think about what could go wrong and establish a backup system or proactive measures to ensure that operations are not affected. When everything stabilizes time comes to overthrow and protect themselves from being overthrown in the market.
While a company may be aware that there is always some competition in its industry, it is easy to miss out on what companies are offering that can attract their customers.
In this case, business risk involves the leader of a company that feels so comfortable with success and the status quo that it does not look for ways to boost or make continuous improvements. The increased competition combined with an unwillingness to change can result in the loss of customers.
Corporate risk management means that a company must continually reassess its performance, refine its strategy, and maintain strong and interactive relationships with its public and customers. Besides, it is important to keep an eye on the competition by regularly researching how they use online and social media channels.
After the risks, there are a number of types of hazards which occurs and lives throughout the business life of a company like
What is a hazard in the workplace?
Risks are anything that can cause harm, damage, or adverse health effects to people in the workplace. Depending on your workplace, they may include:
Biological hazards include viruses, bacteria, insects, animals, etc., which can cause harm. For example, mold, dust, blood, and other body fluids, worms, and other parasites.
The nature of a chemical hazard will depend on the properties of the chemicals used and stored on the premises. It includes health and physical risks, such as skin irritation, carcinogenicity, flammability, and radiation.
Ergonomic risks are the result of physical factors that can lead to musculoskeletal injuries. These risks include workstation configuration, poor posture, and manual handling.
Physical hazards are the result of environmental factors and include heights, vibrations, radiation, and pressure.
Psychosocial risks include risks that can hurt an individual's mental health or well-being, including stress, bullying, and violence in the workplace.
Security risks are those that create unsafe working conditions. For example, melting ice can cause a risk of spillage or exposed wires can result in a trip hazard.
Though you will not at all be able to completely get rid of business risk, practical planning can help you. Awareness is essential to help you save money and time, protecting the trust, reputation, and customer base that you have worked hard to reach.
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