Risks In Business To Be Aware Of

Risks In Business To Be Aware Of

Investment risk means there would be a chance that your investment will not be providing any return.  The risk exposes your bottom line to danger. Whenever you are conducting business, you should consider all the events which pose a risk to business and take necessary action to overcome them.  However, when you trade virtual currencies online, the risk is minimal and can earn huge amount of money as there is much-sophisticated software’s available online like trader.

Below mentioned are few of the common risks faced by business

Reputational risk- Your business will fail to sell its products if your organization loss its reputation or community standing. The business will lose its reputations for many reasons like negative publicity, lawsuits, etc.  It takes quite a long time to build the reputation but in just a single day the reputation could be lost. For instance, negative post or review can occasionally spread quicker online, pushing the organization into the damage-control mode.

Financial risk- Financial risks are directly linked to how the business manages its money like:

  • Which customers does the business give credit to and the time period?
  • Does all your revenue come from a single or more than 2 clients?
  • Are they able to pay the money in time?
  • Fluctuations in interest rates charged by the institutions
  • Foreign exchange rate when dealing with an international company

This is the most critical risk faced by the business as the business will incur loss immediately if the fund flow gets affected. Hence management of financial risk should be given the utmost importance. It plays an important role in generating income consistently.

Strategic risk- This risks results affect directly the business operations which lead to the attainment of the organizational goal like emerging technologies makes your product-line obsolete or if there is a change in customer preference. Apart from this, any other market forces which can push the organization into the danger zone. In order to counteract these risks, one needs to put up various measures in place to get the feedback constantly so that the changes could be found out early.

Operational risks- These risks arise due to internal failures. It happens when the company’s people, system or internal processes fail unexpectedly.  Unlike financial or strategic risk there are no returns to be gained for operational risks.  These risks also arise from unforeseen events like supplier not delivering the goods, breaking down of the transportation system, etc.

 

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