Risk Management in terms of future profitability of a business concern
-Dr. Radhika Wadhera
Risks can be different in nature i.e financial, operational, technical or related to Human Resource. All businesses and non-profit organizations face the risk unexpected events, such as a natural disaster, loss of funds through theft, or injury to staff, customers, or visitors on your premises, could impact operations. Any of these events can cost your organization money or cause your organization to permanently close. With a risk management plan, we can prepare for the unexpected, minimizing risks and extra costs before they happen. By considering potential risks or events before they happen and having a risk management plan in place, we can save money and protect your organization’s future. Purchasing the appropriate Insurance cover for business is an important part of your risk management plan, but it’s not enough by itself. One still must have policies and procedures in place to reduce risks to ensure your assets, reputation, financial security and operations can continue without interruption. Risk evaluation allows us to determine the significance of risks to the business and decide to accept the specific risk or take action to prevent or minimize it. Risk management involves putting processes, methods and tools in place to deal with the consequences of events you have identified as significant threats for your business. This could be something as simple as setting aside financial reserves to ease cash flow problems if they arise or ensuring effective computer backup and IT support procedures for dealing with a systems failure.
Programs which deal with threats identified during risk assessment are often referred to as business continuity plans. These set out what you should do if a certain event happens, for example, if a fire destroys your office. You can’t avoid all risk, but business continuity plans can minimize the disruption to your business.
Risk assessments will change as the business grows or as a result of internal or external changes. This means that the processes you have put in place to manage your business risks should be regularly reviewed. Such reviews will identify improvements to the processes and equally they can indicate when a process is no longer necessary.