What is risk management?
Risk is part of all our lives. A business needs to take risks to grow and develop. In our fast-paced world, the risks we must manage evolve quickly. There in need to make sure we manage risks so that we minimise their threats and maximise their potential. Risk management is important in an organisation because without it, a firm cannot possibly define its objectives for the future.
Risk management is the identification, assessment and prioritization of risks followed by coordination and economical application of the resources to minimize, monitor, and control the probability and/or impact of unfortunate events or maximise the realization of opportunities.
Enterprise risk management encompasses of all kinds of risk throughout an organisation, and creates plans for managing that risk. Industries such as construction, public health, international development, banking, finance, and insurance utilise risk management. People who work with risk management focus on assessing the risks relevant to their companies or industries, prioritising those risks, and making informed decisions to mitigate them.
Every business is going to have risks that are unique to that business. Risk comes from various sources including uncertainty in financial markets, threats from project failures, legal liabilities, credit risks, accidents, natural causes and disasters, deliberate attack from adversary, or events of uncertain or unpredictable root-cause.
Effective risk management strategies allow you to identify your projects strengths, weaknesses, opportunities and threats (SWOT Analysis). By planning for unexpected events, you can be ready to respond if they arise. To ensure your projects success, define how you will handle potential risks so you can identify, mitigate or avoid problems when you need to do.
One important fact to remember is you must risk something to succeed. Where there is no risk, there is no chance of success.
Making sure your company is fully and rightfully registered, tax and all your accountancy issues are done correctly, will greatly help to reduce risks. Registering your company’s domain name, and letting your customers visit a professionally-designed website, and email addresses will also minimise risks.