The prime quality of an entrepreneur stands to be his handling of risk factors, the way to tackle and avoid risk, better described as the risk management process that stands inevitable for any blooming business. The thought of running smooth business stands completely vague as no business attains success without facing and overcoming various challenges and risk in the process.
The definitive aspect of risk marks it to be an unavoidable phenomenon for any aspect of life. The uncertainty achieving outcomes could be tagged in the list of risk,highly applicable for entrepreneurs aspiring to start up a business. The arousal of risk is not only expected at the beginning of any startup but the fulfillment of risk always remains under a business startup, even big established business get exposed to risk.
One of the prime factors in the evolution of a business remains to take hold and attain expertise on risk management techniques. Risk management system is defined by different theorist in various terms, some people tags it to be the decision taking abilities that do not involve identification and assessment of risk, while some people refers it to be a formulation that includes a complete process of risk identification, risk assessment, and decision-making abilities.
Further, risk management could be defined as the systematic way of reacting and implementing the best course of action, correct and required steps with the arousal of uncertainty. This is done by properly magnifying and extracting out the cause of the risk, assessment of risk, understanding the entire problems followed by communicating and in interacting to deal with the situation accordingly. The building of a successful startup online and offline requires attaining a perfect watch on the risk management system both for short and long run.
Some of the risk management steps and the required tools could be elucidated underneath.
1. Establishment of Goals And Context
Risk management poly includes the proper establishment of goals and context due to the purpose of having a proper understanding of the environment in which the business or the organization is going to operate its function. Understanding the relational aspect of the external environment with the internal cultural behaviors of the organization is a must. The prime motive behind the establishment of goals and context rests in preparing and amending of different plan strategies, risk management techniques of the organization along with the identification of the constraints of the environment and the focusing of opportunities.
The prime motive behind the establishment of goals and context rests in preparing and amending of different plan strategies, risk management techniques of the organization along with the identification of the constraints of the environment and the focusing of opportunities.
2. Identification Of Risks Involved
After recognizing the context and goals of the company and studying the external environment and its nature, the next step is to identify the risk that might arise and stand and affect in the well-being of the company, the achievement of the determinant goals of the blooming company. Some of the commonly known questions that need to be focused and evaluated regarding the arousal of risk could be mentioned,
- The time, place, cause and the results of the risk that may occur to affect the organization.
- The risks that are involved in achieving the priorities of the company.
- The risks that evolve with not attending and achieving the priorities.
- The source of the risk, (may involve contractor, suppliers, stakeholders and more)
- Crafting a checklist of the possible up rise of business risk and fraud list that could have an adverse effect on the company.
- Proper preparation of risk assessment tool and implementation of process mapping.
A thorough research on the above points is required followed by the factors that would help in dealing with the risk. Further, risk management also includes in deep research in determining an event as a risk, the cause of why an event could be tagged as risk, what are its determinate effects on the priorities and the goals of the company.
3. The In-depth Analysis Of The Risk Involved
Doing away with the identification of the risk and its involved factors, paves the way for proper analysis of the risk. The analysis of the risk involves a thorough study on the cause of the risk, the elements of the risk, the involved consequence of the risk and the controls that should be taken for avoiding the risk factor.
The analysis of the qualitative, the quantitative and the semi-quantitative techniques depending on the risk factor is also involved.
4. Evaluation And Treatment Of The Risk Generated
With the analysis of the risk and its factors, the risks are further proceeded towards the evaluation of the risk. The solution of the risk needs to be documented and further evaluated.
Often, the risk level is accepted with the vision that the risk lies sufficiently low. If the manager decides to accept the risk, no further steps or treatment is executed on the risk expect the normal controls that are implemented.
However, an unacceptable risk requires treatment. The company while treating the risk gives rise to cost effective option assassinating the risk. Thus the treatment of the risk drives outcomes that result in options for avoiding the risk, sharing of the risk or transfer of risk, retaining or sustainment of the risk, reducing the level of risk by certainly developed option for treatment and more.
The prime intention that lies in the treatment of risk is to reduce the expected level of unacceptable risk. The risk matrix enables one to calculate and determine the consequences led by the risk and its livelihood or the sustain period of the identified risk.
The probability of risk remains very high for any blooming company. The entrepreneur may be out of cash, lack of necessary items might take up wrong decisions that might evolve risk. Proper identification of risk followed by its analysis and required treatment by necessary steps ultimately makes a person a true and a successful entrepreneur.
Tackling of risk that lays the core of every business needs to be attended primarily while the advice of the proper experienced person in the field might lead to help in treatment managing of risk.