It is important to realize that tough times are simply part of any business cycle. One needs to plan for inevitable down times and have comprehensive risk mitigation strategies. These downtimes could be as a result of increase in raw material costs and/or logistics as well as changes in Government rules and regulations. Other contributing factors can include higher taxes, rising costs of employee benefits or changing regional, national or global economic environment.
Remember: when life gives you lemons, stir up a treat!!
Business Continuity along with Succession Planning are essential. But their key limitation is that they mainly look at how to maintain the current business workings in a disastrous event.
Risk Management on the other hand ensures that we identify, mitigate and manage Risks, so that our business can sustain (if not thrive) even in extremely adverse situations.
By mitigating potential ‘risky’ situations, we can lessen their occurrence probability and of course by managing risk, we can ensure that we are correctly evaluating all the associated impact and liability that inadvertently ensues- so that we can correctly include these projections within our business costs and profit forecasts!
Risk Management can be implemented to develop contingency plans and prepare for any eventuality. Controls that are put in place to avoid/mitigate risks may not show immediate returns but do go a long way to increase profitability and maintain brand value.
About the author:
Sandhya Bhat MSc, CSSMBB, CSSE is the Knowledge Expert & Lead Editor for Macro2Micro Learning portal. You can read more about her work by visiting her website. You can engage with her via our contact form.
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