It is for certain that you will face different risks, whether you have small or big business. There are some risks that can easily be dealt with whereas other might put a lasting impact on your business operations. Based on the executives at HSBC in the UAE, there are different types of risks that organizations as well as companies encounter.
4 Types Of Risks
Business Continuity Risk – This is the kind that poses a threat to the ability of your business to remain operational. You should have a plan which allows you to function with the minimum amount of distraction during disasters or errors. This plan must account for all possible physical losses along with certain factors such as sales and production. In such an ordeal, the business must be capable of surviving.
Financial Risk – This is somewhat associated with business continuity and personnel risk. If an individual leaves, the organization must be capable of covering the cost of the loss along with the recruitment and training of the person to replace him or her. Apart from that, the company should also maintain its normal operations.
Personnel Risk – This refers to the possible consequences of losing a very important employee. If such individuals just decided to leave the company and find job elsewhere, you would certainly be dealing a basic loss. Moreover, there are certain factors to be taken into consideration. What if there is no other individual who will take over the task of the person who left? What if such employee takes up a job offered by your competitor? Most importantly, what if this employee has significant responsibilities such as direct interaction with clients? The loss of even a single member of an organization will definitely have an impact on human resource requirements, customer relationships, sales, and other related issues.
Trade Risk – If businesses are exposed to fewer great opportunities in domestic markets, they usually turn their attention toward the international and emerging markets. Though such move might open the companies toward growth opportunities, there is a trade risk. These will include the delivery of goods and services to partners as well as customers in remote areas. Bear in mind that damaged or loss products will translate to losses which can put a strain on your finances and reputation.
The Importance Of A Solid Risk Management Strategy
Because of these risks, the need for a concrete risk management strategy comes into play. Securing the right insurance for such risks is among the best solutions. From healthcare schemes and life insurance for employees, to marine cargo insurance and trade credit insurance to manage trade risks, you can certainly prevent as much of these risks as you possibly can. Indeed, you can gain greater confidence in the financial performance of your business by implementing an efficient risk management strategy.