What are the different business risks and how they can be managed? The answer to this question lies in the below mentioned points:
Security Risk: We are living in a hi-tech era where most of the work is done via internet. Technology is a part and parcel of businesses too. Companies have their records (financial, managerial and other) online. Right from the first activity of the day which is, communication with the parties to business and the last activity of transfer of funds happen with the help of technology. E-mails, online banking are just two of the examples being used to a large extent in everyday life. Protection of data and system is necessary to prevent unwanted attack. Data protection can be done by:
Ø Implementing tight security controls (Install Anti-virus software on all the systems)
Ø Defining and following security guidelines (Put a stop to practices of password sharing)
Ø Install external tools to keep a check ( Cameras on places requiring high security should be installed)
Ø Be ready with the back up plans (Be knowledgeable about the data recovery plans and procedures)
Financial Risks: Shortage of funds as and when required can lead the business to shut down its operations. By managing the finance, the business can mitigate the associated risks. A bit of financial measures as follows, if implemented well ensures the safety and accessibility of funds at the time of need:
Ø Avoid undercapitalization and overcapitalization: This applies to new as well as existing businesses. Undercapitalization hampers the smooth start of a new venture and overcapitalization leads to blocking money in unnecessary activities.
Ø Emphasis on liquid funds: Keep some of the funds in the form of liquid money or easily accessible cash. Ready availability of funds helps to pay off the short term debts as and when these arise.
Ø Gain knowledge about basic financial rules: Gain adequate knowledge on how to read the books of accounts, how to read the passbook entries and how to calculate the break even points in business. Dependency on others will cost you much more than acquiring self knowledge.
Risk in business always exists in one or other form and finance and security risk are a major part of it.