The way you decide to face the risk have a bearing on the future of your business. The following are suggestions on the ways you can manage risk in your business.
1. Accept The Risk
You can accept the risk and take no action to solve the risk.
This can of method to manage risk is good if the risk is small and you are sure it will have little affect your business.
To determine if a risk is small, you have to check your materiality threshold.
Your materiality threshold is the limit to which you can loss money and it will not affect your business to a great extent.
If you have an average sale of N100000 per month you can set yor materiality threshold at N2000.
This will mean that if the risk will affect only N2000 or less, then yo can acceptt the risk and do nothing.
2. Avoid The Risk
If you know the risk, you can totally avoid the risk expecially if the risk will have great impact on your business.
Using the materiality threshold as above, if the risk affect more than 50% of your average turnover, it is advisable to avoid the risk completely.
You can also adjust your plan to avoid the risk completely.
For example, you discover that a particular venture you plans to undertake will be ban by government in the next few weeks.
What you will need to do is to avoid the risk completely by changing your plans.
3. Transfer The Risk
Yes, it is very possily to transfer the risk to a third party.
Transfering risk means involving other peersons and/or businesses to share the risk with you.
They may also help you manage all the risk. For example, to avoid loss of goods by fire, some persons have transfer all or part of the risk to an insurance company.
Also, in a food processing company, for example, the company after producing the goods can employ a third parties to transport and sell the goods.
4. Mitigate The Risk
To mitigate against risk means to reduce the effect of the risk to the minimum.
In this case, you do not run away from the risk but find a means that will reduce the burden of the risk.
For example, if you are to carry out a particular service or job for your client and you discovered that in some areas of thed service or job you have little experience.
You can mitigate this risk by learning more about that particular service thereby reducing the risk of failure.
5. Exploit The Risk
To exploit risk means to take advantage of the risk. Some risk can be have positive impact.
Probably, you are a loan shark and a trusted customer of yours want to borrow a huge amount of money that you do not have sufficient cash to handle.
You can exploit the risk by getting cash from somewhere else, probably a financial institution.