Entrepreneurs face myriad problems in their path of entrepreneurial journey. As a successful entrepreneur, you must have the ability to identify and manage risks in your businesses. In the business world, entrepreneurs are the daredevils in the risk-taking arena. As an entrepreneur, you can face different types of risks while running your business. They are financial risks, market risks, competitive risks, people risks, operational risks, regulatory risks, legal risks, technology risks, systemic risks, competitive risks, strategic risks, compliance, the list goes on. Most of the small businesses or startups are found to fail in the market due to poor risk management.
Entrepreneurs can manage risks by implementing the following ways:
- As an entrepreneur, you can manage risks by accepting it, transfer it, reduce it, and finally eliminate it from the field of business.
- There goes a popular belief that entrepreneurs mostly are not inherently risk takers. You must possess the guts of taking risks in your business. You have to include risk as an integral part of your business while creating value.
- You have to choose the right insurance policy in order to protect your company against losses. For instance, business interruption policy will help you to insure the company against profit, loss or higher overheads.
- You have to formulate a risk management framework where the risks are to be put as per their likelihood and severity. There are four quadrants namely A (ignorable risks), B (nuisance risks), C (insurable risks) and D (company killers) where A being the lowest likelihood risks and D being the relatively higher of likelihood risks.
- You have to understand the fact that reward, achievement, and innovation do not come without any risk. Entrepreneurial journey will have endless risks and failures. High confidence, motivation, and the power of embracing uncertainty will definitely help you in copying to different levels of risks in your business.