IT Systems Engineer Inc. -- Risk Management for the Business Owner

	Risk Management for the Business Owner: By Eneson Masic August 10, 2003 Business is a game of calculated risk. – Zero Risk is not an option. We are all risk takers! Everyday we take risks; it can be as simple as crossing the street or as complex as investing in the stock market. Every business is a risk in itself; some can have very minimal consequences with limited earnings. For example, a lemonade stand wouldn’t involve the same amount of risk as manufacturing space shuttle equipment. Bigger investments bring about bigger risks but, also bigger rewards, if successful. At the end of the day the more risk anyone takes, the greater the potential on the returns. But it’s all up to the individual and his/her ability to take chances, and capitalize on them. One of the first questions you should ask yourself when starting your own business is; what risks am I willing to take to achieve my goals? To put you in the right direction try thinking in terms of risk equaling returns where, higher risk equals higher returns, and no risk equals zero returns. What you should do is begin by identifying all the risks involved in your venture and reduce them to an acceptable level where, you can operate your business efficiently and stress-free. The following is a five step Risk Management process and examples on how to enhance you and your company’s value by identifying and proactively managing your risks effectively. Step 1: Identify Risk – Identify and register ALL risks, no matter how insignificant they may seem at the moment. Do a brainstorming session with your co-workers and family members, everyone will have a different take on it, and that is what you need. Step 2: Evaluate Risk – Determine the impact each risk can have on future operations. Step 3: Analyze Risk – Create “what if” type scenarios. Locate the source for each of the potential risks. Be sure to recognize WHERE, WHEN and HOW the risks may arise. Step 4: Deal with Risk - Create a chart and look for a comfort zone; be proactive about this, once you encounter the risk it may be too late to plan your way out. Put procedures in place to assist you, in the event of any identified risks occurring. You can download a Free Risk Management Chart from: http://www.itengineer.com/risk.html Step 5: Monitor Risks - Do not let your risk manage you, rather learn to manage them effectively and efficiently. Monitor them and just like a business plan, they need to be reevaluated and updated on a regular basis. Risks are not always negative rather avoiding it can be seen as not seizing the moment. Not closing in on an opportunity for growth because of risk paranoia which, is in itself a risk. With this in mind, make sure you balance your risk versus return formula. The best way to avoid failure is to be proactive in both your personal and business life. Example of Risks: 1) Health Risks 2) Family problems 3) Operational Risks 4) Marketing Risks 5) Human Resources Risks 6) Legal Risks 7) Financial Risks 8) Environmental / External Risks 9) Information Technology Risks 10) Physical and Data Security Risks You should always know your risk tolerance level, and be able to identify all the risks and reduce them to an acceptable level. RISK CHART DOWNLOAD: http://www.itengineer.com/RiskChart.jpg For more information please e-mail us at info@itengineer.com Send mail to webmaster@itengineer.com with questions or comments about this web site. Copyright © 2003 ITengineer.com; IT Systems Engineer Inc. website. All rights reserved.