Types of Business Risks and Their Solutions Businesses Need to Know
The types of business risks and their solutions are important things for business people to know. And through this article, we will share all the information especially for you.
"The name is also a business, there must be risks". The sentence is certainly familiar, right?
Yes, you could say that there will always be risks in this business, and it is very natural that even those who are involved in it must be able to accept it.
Specifically, the definition of risk in business can be interpreted as a consequence that occurs and always results in losses.
The greater the goals or benefits to be achieved, the greater the risk to be faced.
Even so, it is not uncommon for accomplished business people to take risks.
This is not without reason, because the risks that arise usually always coincide with the 'benefits' that will be obtained, even though you have to make sacrifices first.
So, business people who dare to take risks will usually calculate the magnitude of the consequences that will be faced in the future.
So, from his estimate, he can determine how much profit or target he will achieve.
8 Types of Business Risks and Their Solutions
In the business world, the risks that arise are usually not just a matter of strategy.
For that, if you are interested in in the business field, knowing the types of business risks and their solutions is the main thing that must be understood.
This does not only apply to novice businessmen, those who have been doing it for decades will also always need basic information about business risks.
And here are the types of business risks and their solutions:
1. Strategic Risk
The first type of business risk and its very crucial nature is strategic risk.
Every business owner is strongly advised to have a mature and not fake strategy so as not to go bankrupt.
Not only when you are about to start a business, your business strategy must also be prepared as perfectly as possible when you want to develop a product, or face competition that can threaten business success.
Besides that, as a businessman too, you must be able to show the nature of a leader who is good and not selfish.
Don't just assume that the strategy you make is always right. At least listen to the opinion of the marketing team who are already reliable in handling market conditions.
That way, you can work together to prevent the risk of an immature strategy and make the business progress.
2. Market Risk
This type of risk relates to the attitudes of entrepreneurs who are unable to cope with changes that occur on the macro market.
For example, when you just want to try the modern dessert business by serving banana nuggets.
In fact, the menu was already well-known before and began to shift along with new menus such as banoffee and dessert boxes.
As a result, those of you who have prepared all the ingredients to make banana nuggets in large quantities are of course losing.
So, from the example of this case, we can draw the conclusion that before starting a business or already owning it, we also have to think about how the market conditions are.
Not always the products sold will sell well in the market, because competition and trends will always be present in the midst of consumers.
It's good that we as business people must be able to innovate so that the business that we are involved in does not experience setbacks.
3. Operational Risk
This type of business risk is very common, maybe even experienced in the daily activities of the company.
In essence, any problem related to business operations is categorized as an operational risk.
And that risk can be caused both individually, by technical failures, to unpredictable conditions such as natural disasters.
Even though it is not as crucial as strategic risk, this one risk can still have an impact on the company. Not only from a financial perspective, but also in corporate image.
If the problems that arise related to operations are from the individual (employee) side, then the only best solution is to recruit human resources who are already experienced and professional in their fields. 4. Financial Risk
This type of business risk is closely related to the circulation of cash inflows and outflows in the company, such as credit and debt problems.
To prevent financial risks in the future, try to re-estimate the company's financial problems, or at least use specialized business accounting software.
In addition, try not to take on too much debt from financing institutions.
Instead, you can look for new investors if your business is growing fast, or sell some shares if you want to expand.
5. Speculative Risk
The next type of business risk is speculative risk.
This condition can occur as a result of decisions made, in which in the future the company still does not know whether it will lose or profit.
An example of speculative risk is price changes in the market. When the input price rises, the company can lose money because it has decreased margins, and vice versa.
In dealing with speculative risks, business people must be able to think through all the plans for the decisions they take.
If plan one doesn't work, then at least there are other plans that can be used. So that all risk of loss can be minimized from the start.
6. Reputational Risk
Another type of business risk is reputational risk. As the name suggests, this risk is closely related to the company's image.
Always maintain the company's reputation so you don't lose your loyal customers.
Do not let the inherent good image be lost due to operational negligence, such as decreased product quality or inappropriate employee attitudes.
7. Compliance Risk
This type of business risk relates to how the company behaves towards the rules or regulations set by the local government.
For example, you open a café business but have a night club concept in a densely populated environment, where the majority highly uphold religion.
This is certainly not in accordance with the lifestyle of the community in that environment, and it is better to discuss it first with the local government, so that neither party feels disadvantaged.
Don't let what you do become a boomerang for your own business.
Instead of being lucky, you have to pay a fine and get ridicule from the local community.
8. Credit Risk
The last type of business risk is credit risk. This condition is not experienced by all business sectors.
However, it only applies to those who run businesses with a credit payment system, or what is commonly called a financing institution.
Credit risk can occur if a company is faced with consumers who are unable to pay their loan installments, either due to bankruptcy or possibly passing away.
So that this risk is not experienced, the company must analyze the financial condition of the prospective debtor so that in the future it does not experience bad credit.
Not only that, the company is also obliged to determine the limit that can be borrowed according to the debtor's repayment capacity, as well as the repayment period.
Well, that's a line of information about the types of business risks and their solutions that you should know.
Every business that is carried out will always have consequences. Just how readiness is you to face it.
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