The term risk is fraught with images of unforeseen crises that agitate your business, followed by a frantic response. This is bound to happen, but the truth is with proper financial management practices in place, the risk can be handled effectively. In reality, every aspect of the business has an element of risk and part of success is the ability to look forward, foresee prospective risks and consider how you can utilize your resources to deal with them.
It is highly imperative to have a risk management plan as part of your overall business strategy management plan in order to sustain and grow. There are several financial courses to help you incorporate risk management into practice:
Planning is very important. Right now it might be calm, but possible storms can erupt anytime. So try to identify the risks beforehand and plan how to respond. Allocate the right resources you might need to keep up with your strategy.
You should not be reactive and only be proactive. If you are reactive, you might not take the right measures in tandem with your goals.
Conduct a SWOT Analysis
This is the first step towards identifying your risks by listing out your Strengths, Weaknesses, Opportunities and Threats. Have your leadership team analyze this for their specific area.
There is also another analysis tool, which can help you identify potential risks. It is called PEST – Political, Economic, Social and Technological factors that can deter your business. Thinking about these things ahead of time will make you well prepared to face the problems.
For instance, the government recently introduced the GST bill. If you have made this analysis, this would have come under the political domain and you could have been ready with the right measures to cope with this change.
Prepare your Response
For each risk, consider the course of action you can take and the number of resources that you are willing to commit towards the same. In some cases you might think your company is strong enough to handle it, that’s great! At times risk will fall right in the middle – it cannot be avoided or accepted. So there your strategy should be to alleviate its impact.
Risk management strategies should not be undertaken just for once, it should be continuous. Rely on multiple sources to stay updated of all the trends with an eye to spot risks. As a leader, you should focus on this continuously.
Maintain a Long-term Outlook
Remember the path is long. Keep moving forward and don’t let risks disturb you. Even if unforeseen events happen, accept it as it is and move forward. Always think long-term and take the right measures.
Make financial risk management as the top priority for your business and remove any hurdles that come along your path. Become an expert with finance courses to identify risks and mitigate them. Enrol into IIM Kashipur’s Applied Financial Risk Management course to master this domain in finance.