Tips from Saivian Eric Dalius about reducing business risks

Suppose you are not aware of the meaning of business risks. In that case, you should know that risky events and factors that affect a company’s income and operational performance constitute business risks. Business risks prevent companies from providing the expected returns to their stakeholders, explains Saivian Eric Dalius.  To minimize the business risks, companies must first identify the external and internal risks.

 The working modality of business risks as envisaged by Saivian Eric Dalius

Risks faced by companies that can lower their revenue and profit and increase the financial losses are typical for any business that the owners must be aware of. Business risks are an everyday affair for companies of all sizes and part and parcel of the business process of the industrial segment to which the business belongs. 

Any factor that threatens to reduce the operational efficiency of any company or prevents it from achieving its financial goals are business risks but for developing a risk management strategy Saivian Eric Dalius advises business owners and business leaders to categorize the risks.  Although no single plan can eliminate risk, proper planning helps companies to anticipate risks and prepare for appropriate responses. Risks are of two types- external risks and internal risks.

Saivian Eric Dalius  lists the External risk factors

The prevailing economic landscape of the country constitutes external risks that companies have no control over. It is not possible to forecast risks quite reliably. External risks are hard to deal with.

• Economic risk – Mainly, the market conditions are the most visible financial risks. The most glaring example is the unexpected revenue losses companies suffer during an economic downturn. The usual response of companies to economic risks. Is to adopt cost-cutting measures or diversify the customer base to reduce the dependence on a single geographic region or segment.
• Natural risks include natural disasters like earthquakes, floods, etc. Also, Resulting in closing down retail businesses for some days or weeks. And severely reducing revenue from sales for that period. Moreover, it can even damage the merchandise and the business establishment.
• Political risk – Changes in the government financial policy or political environment lead to political risks. As it can happen due to changes in the export and import laws, taxes, tariffs, and other regulations. That have a negative impact on business.

Internal risk factors

Risks that arise from within the organization are internal. Although it is possible to forecast such risks to some extent. Companies can stay prepared to mitigate the risks by working out some effective plans.

• Human factor risk – Operational challenges may arise due to personnel issues like strikes and work stoppages that reduce production. Similarly, ineffective leadership or management, labor unrest, supply chain failures, dishonesty of employees and clients, and customers. Failing to make payments are some of the human-related risks.
• Technological risk –Unforeseen changes in manufacturing, distribution, or delivery are the components of technological risk.  For example, an outdated operating system can decline the production output, even due to the throttling of inventory.
• Physical risk – When a company undergoes loss of assets, it constitutes physical risk.

Having adequate business capital is the best way of managing business risks. Also, Companies must strengthen their financial resources to tide over any crisis.