Are you ready to take on risk? It’s unavoidable—so set your strategies in place now.
We’ve all heard famous quotes like “With risk comes great reward” or “Take risks. If you win, you will be happy; if you lose, you will be wise.”
Last December, I wrote an article here about the possible risks an entrepreneur might face once they have decided to start a business. Now we shall look at how to deal with those risks.
A person can look at risk in the form of “loss” or “win.” You either accept a risk and overcome it through the mindset of winning, or you can be hesitant and think I am never going to get this done right—and eventually lose.
A business owner will encounter endless forms of risk throughout the business lifecycle. It is important to have the basics of risk management in place, and seek further help when things get really nasty. You are not the expert, after all.
Here are few tactics to use when a business owner needs to handle risk:
- Accept risk and uncertainty. When kicking off your business, you might have that feeling of “The risk is high, what if I lose? What will I do?” which could really put you off. However, as you move ahead and accept the challenge, you might notice that your appetite could even grow to accept more and more risk, as you see the positive outcome of understanding and handling it. Of course, this doesn’t mean you should accept a risk without proper assessment and planning. Always think and be prepared for the outcome.
- Understand the types of risk. Beware of the different types of risk you might face, including:
- Strategic, such as competition and market.
- Compliance, such as new regulations issued by higher authorities.
- Financial, such as not being able to pay a loan installment.
- Operational, such as not being able to cope with demand.
- Risk Evaluation: There is no such thing as identical risk. Each risk you face will have its own characteristics and impact—hence, you need to evaluate it properly and carefully. One way to evaluate a risk is to consider its consequences and the probability of its occurrence. It is always a good idea to rank individual risks as high, medium, or low.
- A T R E—Deal with your risk through:
- Accepting it.
- Transferring it, perhaps via an insurance policy.
- Reducing it, perhaps through the introduction of new systems or policies.
- Eliminating it. This can be accomplished by dramatically changing the way you run the primary aspect of your business in which the risk is present.
By: Hasan Zainal