How to Deal with Risks?
1. Prioritising the Risk
Prioritising risks and threats should always be the first step in developing a business risk management plan. Using a scale based approach on the probability of each risk occurring, you may do this:
Very likely to take place
Some probability of occurrence
Low probability of occurrence
Very low probability of occurring
Naturally, a risk that falls into the top category should take priority over the others, and a strategy should be put in place to avoid, or at least mitigate, these risks. There is a catch, though. Priority should be given to a risk if it is on a lower rank, but has the potential to cause greater financial harm.
2. Buying Insurance
Determine the types of insurance that your company will need by evaluating liabilities and legal requirements. This might have included: life insurance, disability protection, specialised insurance, operation-specific insurance. When compared to the potential cost of uninsured risk, purchasing insurance offers you the opportunity to shift your risk to insurance firms for a relatively low fee.
3. Implement a programme for quality control
If you want a successful business, having a solid reputation is essential. Customer service is essential for success. To ensure the highest quality, make sure to test your goods and services. You will have the chance to make necessary adjustments by analysing and testing what you’re giving. Consideration should also be given to improving your testing and analysis methods.
4. Restrict High-Risk Customers
If you’re just starting a business, put in place a policy that requires customers with bad credit to pay in advance. This will assist you in avoiding issues later on. You need a method to spot high-risk borrowers with bad credit in advance in order to achieve this.
Some other points that can help to deal with Risks are as follows:
- Too risky transactions should be avoided.
- Preventive measures should be uses, like firefighting devices, etc.
- Provisions should be made in the current earning.
- Risks should be shared with other enterprises. For example, an agreement can be signed with other enterprises to share losses in case of falling prices.