Business Risk Management for Young Entrepreneurs
As a new entrepreneur, you have plenty of things to worry about when you take on the daily tasks of running your business. One of the more important elements of your business that requires a lot of your attention is risk management. The problem that many new entrepreneurs run into with risk management is that they do not appreciate just how comprehensive a good risk management plan needs to be. If you want to protect your business from loss, then you need to take a long look at your exposure to risk and then reduce that risk. There are many ways to decrease risk, but you first have to become familiar with the entire concept of risk management before you can begin protecting your business.
Exactly what is risk management? It is the process of identifying the ways in which your company can be negatively affected financially and operationally and then developing comprehensive ways to reduce the possibility of those events happening. It should be noted that no risk management plan is perfect. But the lack of a risk management plan can cost you a lot of money and could potentially put your company out of business. When you use the proper resources to craft a comprehensive risk management plan, then your company will be able to bounce back from potential tragedy as opposed to being devastated. Good risk management practices can cover your company for potential property or financial losses. You can also include risk management plans that help your company to continue to operate if one of your key employees leaves your business. Without a risk management plan, your are putting your company in harm's way.
In order to put together a good risk management plan, you need to understand what kinds of risks your company faces. The more common kinds of risks are losses due to storms, fires, floods, and other natural disasters. When you have partners in your business, then that creates new levels of risk. If one of your partners passes away or leaves the company, then you need to be able to offset that loss in order for the company to survive. Other kinds of corporate losses include customer and employee theft, Internet fraud, poor business decisions, unexpected damage to company facilities or equipment, and unexpected financial losses due to product malfunction. When it comes to risk management, you have to think of every possible scenario if you want to plan properly.
There are two tools you can use to create effective risk management plans: contingency planning and business insurance. In most cases, the two will work together to get you the results you need. As an example, let's say that your office is destroyed by a flood. The insurance side of your risk management plan will kick in to replace damaged equipment, restore your office, replace lost revenue, and give you the funding you need to keep going. Your contingency plan will include a place where a temporary office can be set up, a way to transfer all phone calls to the temporary location, and a way to establish a computer network that allows your company to keep generating revenue.
Risk management is something that new entrepreneurs need to become familiar with if they want their businesses to survive. The only person who is looking out for the long-term success of your business is you. That is why you need to create comprehensive plans that will allow you to keep working, even when it seems like everything is going wrong. Whether your office has been burned down in a fire or your lead development engineer just left the company in the middle of an important project, your risk management plans should be able to help your company survive the problem and get back on track right away. If you want your business to survive for many years to come, then you need to create comprehensive risk management plans for every possible contingency you can think of. If you do not, then you are exposing your company to a great deal of potential problems.
- Risk Mismanagement
- What Is Risk Management?
- Managing Risks: A New Framework
- Controlling Costs With Risk Management
- Step-By-Step Guide To Risk Management
- Risk Management, Disaster Planning and Protecting Against Crime
- Definition of Risk Management
- Risk Management
- ISO 31000: Risk Management
- Manage Risk: A Comprehensive Guide
- Identifying and Managing Risks
- Business Risk Management
- The War on Error: Human Error as a Strategic Risk Management Concern
- Risk Assessment Checklist
- Sample Risk Management Plan (PDF)