All businesses from small to medium are exposed to risks all the time. These risks can directly affect day-to-day operations and decrease revenue or increase expenses. Such an impact may be serious enough for your business. Sound risk management with risk mitigation strategies will help in various scenarios.
Risk management starts by recognizing possible threats and then implements processes to negate or minimize them.
But for that you happen, it is essential that you identify the risk and mitigation processes first. Then select from the various types of risk mitigation strategies.
Let us take situation based risks and risk mitigation strategies for each in pointers:
Scenario: The business is highly-dependent on a small number of major customers. There is one customer who generates 55 perfect of the total revenue or a group of five customers who collectively generate the same amount. What kind of risk mitigation plan should be implemented if there are clientele that takes up your time but are less profitable?
Risk: If your business relies on a small number of major customers, cash flow and profit may get affected in the short term if one stops yielding revenue.
There are many strategies that you can choose to follow like:
Scenario: The business is highly dependent on a small number of major suppliers. You have one supplier that provides 30 percent or more of the total product requirements. Or there is a supplier whose failure to supply can stop your business.
Risk: If your business depends on a small number of suppliers, production, profits, and cash flow could be affected if one of them fails. You will also require a comprehensive risk mitigation plan if one of them stops dealing with you.
You can opt for any of these risk mitigation strategies:
Scenario: Your employees eye it as a short-term employment option. They believe that it is a good learning palace for a while and for a start to the career.
Risk: If your business is seen as a short-term employment opportunity, high staff turnover could result in disruption to the business. These expenses of finding and training new staff that leave early will not be profitable to your company as well.
Scenario: There are employees in the business who are critical to its success.
Risk: If an employee is critical to your company’s success, then sales and profits may suffer if the employee sets up business in competition.
Scenario: All businesses, including yours, are exposed to the threat to its reputation and goodwill.
Risk: In an event where there is a large-scale product recall, fraud, or similar event, it will lead to a lot of bad publicity. It will cause distress to your business, including putting it to trouble and expense of reworking. And cause longer-term damage to your company’s reputation.
The risk mitigation plan should include:
Scenario: Your organization relies heavily on information technology. Due to the server being slow or down, your office work is getting hampered.
Risk: If your company is IT reliant, your business might not be able to operate without it. Many other risks are linked with IT:
These should be a part of your risk mitigation plan:
Scenario: Your organization is exposed to risks from changing tastes and trends or the impacts of an economic downturn. A downturn may impact your customer base.
Risk: With changing trends or an economic downturn, the viability of the business is at stake.
At TRC Corporate Consulting, we excel in partnership models and ensure that our risk mitigation services prove as a benefactor to the firms. We undertake all necessary directives and ensure that our experts formulate the best types of risk mitigation strategy as per the situation.
Our motive, at TRC, is to provide a safe and secure environment enabling your organization to fulfill your dreams and attain objectives. Get in touch with us to understand our risk mitigation services. If you face any trouble, we will be happy to help you!
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