1. ASSESS & IDENTIFY
First, you’ll need to find the possible risk areas in your business. Risks can be both financial and physical. The risk may fall into one of these categories:
2. MEASURE & EVALUATE
Effective risk management depends on risk quantification. You need to spend some time and money on this highly important process. Only then will you be able to rank risks by their magnitude and deal with them in an informed and cost-effective manner?
3. CONSTANTLY REASSESS RISKS
Factors affecting risk are constantly changing. This includes market conditions, volatility levels, geopolitical conditions, etc. This means risk management must be an ongoing process.
4. INVEST IN ADEQUATE RESOURCES
Those in charge of risk management must be highly trained because mistakes made during this process can be costly. Investing in risk management will undoubtedly pay off.
5. REDUCE EXPOSURE
When there is less exposure, there will be less risk. By integrating risk awareness into all commercial activities and business processes, you can reduce current and potential risks.
6. ASSESS THE RETURN
Be sure to monitor the outcome of any risk management procedures. This way, you can see the rewards and gains involved in each task. From then on, you can make better business decisions based on the risk/reward balance.