Evaluating Risk in Your Business

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Risk management has become one of the corporate mistakes made by Small and Medium Enterprises (SMEs). It comes with a heavy cost at the end of the day. The fact is that there is a misconception about the application of risk management. Large organizations spend a lot of time and money on improving their management, whereas SMEs require more risk management as best practice.

The truth is that larger business enterprises are capable of absorbing consequences of exposure due to poor compliance with best practices. SMEs cannot withstand such exposures to risk, even minor theft, fraud or financial loss can destroy a small or medium business. Apart from this, another truth is that failure to ensure compliance with risk management increases chances running out of business.

The only way to manage a business is when you understand the basics of risk management. Risk must be defined to ensure compliance with best practices to avoid a negative impact on the business. The standard definition of risk is as an occurrence that leads to losses, most importantly monetary losses. It is important to understand that risk can be industry specific, and they vary. However, some common risks include:

Evaluating risk in your business requires an assessment of all these subcategories if risk management.

Further reading: Corporate Governance | Audit | Performance Improvement

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