Risk Management – 10 Tips on How to Minimise risk

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Risk is administered in any business and it can be damaging to the business and even threatens its survival. It is therefore necessary to be aware of different risks, to understand its potential impact on the business and know how to manage it effectively. This article gives some tips on how to reduce the risk

  1. The product and service offering to business must change with customer preferences. Too much trust in one product (or any products) should also be avoided.
  2. It is good to have other supply chains (including suppliers and distribution channels). Good relationships have to be built with all relevant parties.
  3. Bonds help companies to grow. However, it can be dangerous to have too much debt and it should be limited to serviceable levels.
  4. Confidence in one or a small number of customers can be very risky and when possible it should be avoided.
  5. Proper budgets need to do. Cash flow planning is one area that can highlight potential risks and pro-active then you can take.
  6. Financial management should constantly do. Ratio analysis will show where the problem area (eg ROI). It also gives an indication of liquidity and solvency risks.
  7. It is advisable to protect the company as far as possible against factors that are not under the control of the company. This applies particularly to international trade and unexpected currency fluctuations.
  8. Business Growth should be kept sustainable. Too much growth can seriously drain the resources and can even lead to bankruptcy. Systems and skills also need to keep up with growth.
  9. Proper standards of production should be followed. Products that are not standard can damage the image of the company or even destroy it as a whole.
  10. People are the core of any business and they should be treated as such. People after trading for several reasons. Because of the sensitive information must be protected by confidentiality agreements and restraint of trade agreements.

Copyright © 2008 – Wim Venter

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