In spite of the fact that all businesses that are operated by small business owners face high risks, risk factor in small and big businesses is the main overlooked area. Risk minimizing is very crucial, although taking risks in business and winning on risky gambles is fun. It is the same as in any venture that involves risk. Businesses both small and big need to deploy good risk management processes in place. They should have a system that manages business risks continuously through process 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 that are thrown up by search engines. Some of the typical subjects that are result of such internet searches are insurance, OSHA standards, financial safeguards, issues related to environment protection and sustenance, government legalities, computer back up systems etc. All of these are risk control systems and are specialized topics for risk control. However, they do not help a business to identify risks.
Five-Fold Risk Management System:
For any risk management system to succeed, business owners and or managers to take steps to ensure that all the steps involved in risk management system are followed comprehensively. Risk management requires adherence to five steps: identifying risks, quantify them, making strategies to contain risks, formulate and implement strategies conscientiously and monitor 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 man from the Mars 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 for their respective business to do a good brainstorming session. A good starting question would be “what if this happens? How to limit damage? How to tackle the aftermath?" 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 risk management of your business. You may also go in for computer software solutions to identify business risks of your business and minimizing them. Such softwares are good support solutions if you are doing risk management for yourself. They are equally good and tailored if you are outsourcing your risk management solutions.
Alexander Gordon is a writer for http://www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
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