Risk management is the identification, evaluation, and prioritization of risk as well as the coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities. The objective is to assure uncertainty does not deflect the aim from business goals. Risks may arise from various sources including uncertainty in financial markets, threats from project failures, legal liabilities, credit risk, accidents, natural causes, deliberate attack from an adversary, or events of an uncertain or unpredictable source. Negative events can be classified as risks while positive events are classified as opportunities.
A risk management plan and a business impact analysis are important parts of a business continuity plan. By acknowledging potential risks to a business and devising ways to minimise their impacts, one’s business is more likely to survive any impact from an adverse source. Types of risk that may occur vary from business to business, but including a risk management plan often involves a common process. A risk management plan should detail strategies for dealing with risks specific to one’s business. Strategies to manage threats and uncertainties with adverse consequences typically include avoiding the threat, reducing the negative effect or probability of the threat, transferring all or part of the threat to another party, and even retaining some or all of the potential or actual consequences of a particular threat, and the opposites for opportunities.
In every business, there are risk factors which are sometimes inevitable, for this reasons risk management is a vital part of running a business which should not be overlooked or downplayed.
Olatorera Consultancy Limited provides business development services to high net-worth individuals and companies looking to grow, enter or do business in Africa.