How To Manage Business Risk

Business risk originates from internal to external sources. The best ways for a business to manage risk is to evaluate risk factors and make
contingency plans on how to deal with the risk when and if it presents itself. Planning for these risks is the ''main term'' of managing a business risk, but you cannot plan for everything, so managing risk also has a lot to do with how you react when risks arise.

Step 1: Write a business plan

The process of writing and putting together a business plan is a vital step to assessing, evaluating and planning for the risks of running a business from the business onset. This includes operations, finance and marketing.
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Step 2: Determine insurance needs and obtain coverage

Most businesses carry liability insurance or insure the building and contents where the business operates. Depending on the business activities, you need to determine the other types of insurance and obtain the correct coverage for your business. For example, a tile installation business should carry liability insurance in case a worker is injured while installing tile. A real estate business or legal business may obtain an errors and omissions insurance policy in case a client sues for a professional wrongdoing.
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Step 3: Write a risk management plan

Separate from your business plan, write a risk management plan, which lists all of the possible risks that can affect the business. The plan also lists the steps, procedures and ways in which the business intends on dealing with the risk as it arises. For example, if your business is located in an area of the country prone to hurricanes, then you may have a hurricane preparation plan on how you can minimize the risks associated

with this type of weather to your business.
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Step 4: Train employees

Avoiding risks and how to deal with the risk if it occurs can help the business avoid further damage or exposing itself to risk in the first place. For example, if your business deals with a heavy machine, such as forklifts, you may want to have each employee earn a short-course certification for operating the machinery as proper operation of the forklifts can avoid injury and damage risks.
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Step 5: Update plans

Even the best of planning efforts may fall short, so when the business is exposed to a risk, react accordingly and then put a formal plan and procedure in place in case the same risk occurrence happens again.
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Step 6: Sack and recruit employee

As competence of employees are essential for the health of the business, strictly demand sacking and recruiting new workers where necessary to cover lapses. And no sentiments should be applied because, the business might face jeopardy in the nearest future.
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''Conclusively, just as a dream comes before action, a proper business plan serve as the pacesetter to preventing business risk.'' 

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