Author Box
Articles Categories
All Categories
Articles Resources

How to Identify Ways to Reduce the Risks Facing Your Business

April 10, 2012 | Comments: 0 | Views: 152

I don't normally write on pure business topics. My specialty is project management. Of course as a project management consultant, I am often in a position to observe strategic efforts. And as a small business person, I am constantly facing the same problems as any other small business person.

One of those problems is risk.

As a project manager, risk is a condition that is dear to my heart. In fact, some writers have said that project management is all about reducing risk. While I certainly wouldn't go that far, I would agree that risk management is a key focus for any project manager. And it's one of those items that distinguishes project management from operational management.

As a project manager, we are constantly asking ourselves how to identify ways to reduce the risks facing our projects. As an entrepreneur, one of the things I've realized is that building a business is just a very large project. So in this article, I'm going to show you the same techniques I use to identify ways to reduce the risks facing your business.

Part of the problem with trying to identify the risks facing your business is simply the sheer overwhelming size of the endeavor. There are so many risks and so many opportunities that one doesn't know where to start.

Part of that problem has to do with our poor use of English. What we call risk isn't. Risk is actually a reference to the probability of occurrence. If something is certain then it absolutely will happen or it absolutely won't happen. Risk refers to that in between area -- neither certain to happen nor certain to be avoided. But if that's true, then we need two other concepts. One is the event that is at risk. What is it that might happen? We call this the risk event. The other concept is the effect of occurrence. If the risk event occurs what will be the effect? If I was teaching risk management, I'd be sure to point out that the effect doesn't have to be negative. It could very easily be positive. But since we're talking about reducing risks from a business standpoint, I'm going to focus on negative risk effects.

So what does all this have to do with identifying ways to reduce the risks facing your business?

By considering risk management in this way, we are able to identify a six-step method for identifying ways to reduce the risks facing your business. Each of the three elements becomes a step in an overall process to manage your exposure.

The first step is to identify the risk events. What is it that could cause a failure or could set your business back? What might happen to your business? Now, you may be tempted to think in terms of insurable risk events. Fire, for example. Or theft. However, many other events could occur. What if one of your competitors came out with a major advance? Or one of your suppliers went out of business? What if one of your key employees quit? What if there was a weather change? How would your business be affected?

The next step is to analyze the risk events. You need to identify two things about each of the risk events. First, you need to identify what the effect will be? How much will it cost to repair? How much will it cost in lost business? You also need to identify what the risk or probability is. How likely is it that this event will actually occur? Often you will only need to qualitatively determine the risk initially. Is this very likely, or is it highly unlikely? Or something in between?

Step three is to put the risk events in order and to identify which ones you need to worry about. After all, you don't want to spend time solving a minor issue that isn't likely to happen.

Now it's time to identify the ways to reduce the risks facing your business.

For each of the risk events, think of ways to reduce the probability of occurrence. How can you make it unlikely for this event to happen? Technically, we call this reducing the risk. All we're doing is trying to make an event less likely.

The next step is to do the same thing with costs. For each of the events, how can you reduce the costs of occurrence? How can you reduce the cost of recovery? What can you do to reduce the effect the risk will have?

The sixth and final step is to select the best techniques from the mitigation or avoidance techniques you've already identified.

Do you want to read more free information like this? Visit us at http://www.vproz.ca and read our blog. While you're there check out other articles by Glen Ford

Or check out my newest book available on Amazon at http://vproz.ca/books/how-to-document-a-project-plan

Glen Ford is an accomplished project management consultant, trainer and writer. He has over 20 years experience as a project manager in such diverse projects as Construction, IT, Software Development, Marketing and Business Startup. He is a serial entrepreneur who quite literally learned to be an entrepreneur at his great-grandfather's knee.

Source: EzineArticles
Was this Helpful ?

 
0
 
0
 
Rate this Article
 vote(s)
Feedback
Print
Re-Publish

Article Tags:

Risks Facing

,

Risk Events

,

Risk Management

,

Project Management

,

Small Business

,

Identify Ways

,

Manage Risk

In India, employment opportunities are set to grow by a good margin in the coming year, a phase which was started in the turn of the second decade of the 21st century. organisation, candidates with

By: Sarkariexam l Business > Careers Employment l April 01, 2013 lViews: 11709

Sometimes it is amazing to see that certain jobs can precipitate huge turnouts in the recruitment drives. It is as if thousands of people were waiting for the vacancy advertisements and the moment

By: Sarkariexam l Business > Careers Employment l December 30, 2012 lViews: 690

In recent times, jobs in healthcare segments have grown tremendously. It is anticipated that this growth curve will continue for the times to come. Various factors are responsible for this

By: Sarkariexam l Business > Career Advice l December 27, 2012 lViews: 449

Are you in a dilemma whether to choose web based CRM or not? If yes, don’t worry. You aren’t the sole person having this doubt.There are numerous firms trying to make out whether investing in a

By: Reneta Vasileva l Business > Customer Service l December 23, 2012 lViews: 409

If you think about it you will realize the fact that each business has its own set of risks that are involved in it.The trade secrets that you have and the information related to the business is what

By: brumbrum1 l Business > Risk Management l December 23, 2012 lViews: 263

As the time is changing, concierge management services are now growing despite the slowing economies of the world. The main reason of it is the need that is highly specific to the people who like to

By: willsmith10 l Business > Management l December 23, 2012 lViews: 334

If you think about it you will realize the fact that each business has its own set of risks that are involved in it.The trade secrets that you have and the information related to the business is what

By: brumbrum1l Business > Risk Managementl December 23, 2012 lViews: 263

Culture is the single most defining factor in any organization, not only to effectively implement any number of important corporate strategies, but in order to achieve an overall health and success

By: Charles Scott Coxl Business > Risk Managementl July 27, 2012 lViews: 271

Some say it takes brilliance to solve problems, and that may be so. The same folks will tell us that it takes a genius to not have the problem in the first place. Nevertheless, generally speaking

By: Lance Winslowl Business > Risk Managementl July 24, 2012 lViews: 239

A well-defined agreement is needed when establishing a reciprocity relationship between stakeholders. These agreements should define the roles, responsibilities and needed efficiencies of the

By: James E Fogartyl Business > Risk Managementl July 24, 2012 lViews: 198

The legislation regarding food safety measures is getting harsher every day. Anyway, this is not something to complain about considering that when it comes to food people's lives are involved. Quite

By: Tom Chicconel Business > Risk Managementl July 23, 2012 lViews: 210

Decision making can be regarded as the processes of selecting one or more choices. A critical ability for successful decision making is to correctly weigh the criteria in terms of relative importance

By: Anthony Comerfordl Business > Risk Managementl July 22, 2012 lViews: 182

As a project sponsor, you have a number of responsibilities. One of those is to clearly communicate to the team and stakeholders what the project is all about. In this article, you'll discover four

By: Glen D. Fordl Business > Managementl April 25, 2012 lViews: 126

Being a project sponsor is a very important role. But why? In this article, you'll discover what the role of the sponsor is and why it is so important.

By: Glen D. Fordl Business > Managementl April 24, 2012 lViews: 194

One of the biggest problems with performing risk management in the real world is estimating the probability of occurrence for the risk event. In this article, you'll discover a method for determining

By: Glen D. Fordl Business > Risk Managementl April 18, 2012 lViews: 184

Risk management is a phrase that is often tossed around. But what is it really? In this article, you'll discover what risk management is.

By: Glen D. Fordl Business > Risk Managementl April 17, 2012 lViews: 173

Risk management is a complex, time consuming and often frustrating task. So why do we do it? Of course, we claim that risk events will destroy our projects. But there has to be a deeper reason. In

By: Glen D. Fordl Business > Risk Managementl April 17, 2012 lViews: 185

Risk is part of the game when building a business. You need to risk-proof your business strategy as much as possible. But how? In this article, you'll discover 3 tips to help you.

By: Glen D. Fordl Business > Risk Managementl April 12, 2012 lViews: 171

Discuss this Article

comments powered by Disqus