management of risk in Business

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An entrepreneur can use these four basic management techniques below even though they are many ways risk could be managed. there include

• Risk - Avoidance Techniques
• Risk - Reduction (Reduction strategies)
• Risk - Shifting Techniques
• Risk - Assumption Techniques

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Avoidance Techniques :

"It takes twenty years to build a reputation and five minutes to ruin it. if you think about it, you will do things differently"_ Warrant Buffet American's greatest investor
"Succes lies on the far side of failure"_ Thomas Watson, founder of IBM

These two men took calculated risks and succeeded. Risks that are obvious and certain must be avoided. Do no offer to sell newspaper to illiterate or pigs to Muslims!

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Risk - Reduction Strategies : This strategy involves reducing the risk of developing a new product through careful product planning and market testing.

fear of failure should not block sound reasoning. Be gutsy. There is no problem in making tales starts or mistake along the course of things. The important issue is to have courage, the sight, and the ability to adjust swiftly. the best way is to maximize the chances by starting from the known, guided in part by intuition. In searching for the right way, the entrepreneur should have trust in the belief, and hope in the favorable outcome of things. Entrepreneurship is about trial and error and even heresy. His thought must be big and great in all circumstances.

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Risk - Shifting Techniques : Here, it involves transferring the risk to an Insurance Company to assume the risk. risk such as Theft, Burglary, Accident etc. The insurance companies are paid heavily, to assume these risks, hence, micro business insurance is the contract (policy) in which, owner of micro business receive financial protectiion or financial reimbursement against losses from an insurance. Insurance policies offer protection against economic loos or damage which can me measure in purely financial terms and compensated by money. The purpose is to place the injured party, as nearly as possible, in the same financial position as if the loss had not occurred.

the commercial insurance helps to protect many risk which micro businesses can face, including;

• damage or destruction to business assets, certain liability exposures resulting from the operation of your business assets and tools; vehicles, machinery/production facilities, chemicals and staff, etc
• damage or destruction of office inventory; risk t goods on transit (waybill) or in store; theft or loss of tools and equipment, crime coverage including fraud, robbery, burglary and even employee dishonesty. Even disease attack to birds in a poultry enterprise.

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Risk - Assumption Techniques : there is a likelihood that a potential loss occur will be "acceptable". This can be done by setting up special funds to cover cover losses associated with unforeseen events. Entrepreneurs should approach risk situation by thoroughly assessing the likelihood of success and the extend to which his effort should positively influence the situation. The entrepreneur should take the risk - regardless of whether it will be successful or failure.

Do not be discouraged by difficulies, hard times, and failure. life is a fluctuation; and endless process of starting and restarting. Many people make a big mistake; they do not venture because of fear of failure. they are troubled looking for how to make it failure-free.

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Risk can also be reduced or managed by the following processes:

• Assessing the Risks
• Establishing adequate standard and procedures
• Training and monitoring and auditing system.

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