Businesses are continually affected by societal, economic, and environmental risks. These are any factors that can cause the business to fail or serve to lower its profits. There are a number of proven ways to either avoid or mitigate the harm that these risks can do to the business.
The number one piece of advice has to be around improving your education and knowledge, as it is in the understanding of the external risk as well as the aspects that are at risk within the business that will allow you to deal with them.
· Good basic understanding of business management principles
Managing the business and understanding what the business needs to function and succeed and then managing these processes will be the absolute basic necessity to understand risk. One of the best ways to achieve this and access the required skills is an online business management degree that will provide the foundational skills and understanding of how to run and structure the business. This kind of knowledge will also allow you to mitigate the distinct types of risk inherent in the business model.
· Know the market/ your competitor’s
Having a clear knowledge of your competitors and what the market is doing is a clear means of avoiding strategic risk. This occurs when the business doesn’t operate according to the model or clear plan and deviates from this or where the competitors have developed and moved the market ahead of the business. Being aware of what the market wants and when and then knowing who or which businesses in your sector provide these products or services must be one of the primary steps to avoid risk.
· Understand and use big data to show trends
Knowing what may happen or predicting market changes with a degree of certainty is a key element of mitigating and avoiding risk. Big data accumulation from the numerous customer contact points, social media, and more, provides a wealth of historical information that can be mined and analyzed to provide critical insights. Some of the best examples in this regard include pinpointing fraudulent financial activities by analyzing massive data sets of transactions or immediate credit checks done in real-time using masses of integrated financial and transactional data. We are in an age where no business can operate at its best and deal with the plethora of business risks without the use of big data.
· Maintain a clear and consistent marketing message
Reputational risk is one of the main aspects affecting businesses online, and in today’s economy, most businesses are online. In the past, any business misdemeanors may have been reported in a local paper, but with the growth and spread of the internet and social media, reputational issues will be highly publicized online and done immediately, serving to damage reputation, resulting in a diminished bottom line. Having a clear and consistent brand message, with honest and open communication with customers and clients, is one of the best ways to avoid reputation damage.
Having a clear understanding of the possible risks is the first step and then being able to maneuver within the business to avoid or lessen the impact of the said risks is the next. The one aspect of modern business that is going to be critical for any possibility of business success is how we deal with risk; the alternative is to ensure that you are fully insured and covered for what may happen.
