Risk Management in Small Businesses

In a perfect world each individual would jump at an opportunity of running a business free of risks and uncertainties, unfortunately this is not the case, behind every success there is a painful story.

Starting a small business comes with lots of challenges; entrepreneurs spend time and money developing a good business plan that is fitting for their prospective business. However, the management of risk is often overlooked by entrepreneurs who mistakenly believe that the loss is best dealt with once it has materialized.

Risk refers to a possible loss which may arise from operations, people, process, systems, and internal as well as external events.  Once these are overlooked in your business operations they will interfere with your company’s financial stability.

As humans we not more immune to bumpy roads, even your well established institutions have been drawing traction from different experiences and through these up and downs they review their processes.  By applying correct measures any entrepreneur would be able to succeed and humans are no strangers to such behaviour as they are risk takers by nature.

Even though humans tend to be risk averse the willingness to accept risk differs, some of the workers would appreciate a lower wage than exhausting their life savings into investing in businesses which are full of uncertainties.  The reality about entrepreneurship is that “results are unknown”, you may either make or break it, and that in a nutshell is what risk is about.
Risk management is the ability to address the risk in order to minimize its affect on the business. If effectively managed, the impact of the loss on the business will be minimal. 

Unfortunately your business will never be immune to losses if the risk exposure is not treated appropriately.

Written By: Nwabisa Gonya, Risk Manager and Entrepreneur - Iso Labasha Holdings

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