In today’s globalised market place, business risks are no longer restricted by industry or location, and are thus becoming more complex and unpredictable. Here are some of the things which business owners and managers most fear.
1.Firstly come political risks. Political events can easily disrupt markets, as seen through the economic recessions of Greece, Portugal, Spain and Italy. These weakened economies have huge effect across the globe, as seen when the drop in real estate values, record high foreclosure rates and default rates on loans in the US triggered a worldwide credit crisis.
2. Cash flow and liquidity also pose a significant threat, as changes on the market have been known to happen overnight, making these risks highly unpredictable.
3. Commodity price risk is mostly insurable, however companies that are dependent on natural resources should be cautious in a volatile commodities market. When product price is dependent on being under a certain level, and commodities rise over that price, margins can become increasingly tight.
4. Interruptions of business are classified by Aon as major disasters that impact whole communities, however, one cannot ignore those smaller scale interruptions such as power cuts. Unforeseeable risk events, either natural or man-made, can have a crippling effect, and Aon says that 80% of companies that fail to recover from a disaster within a month will go out of business. Preparing a contingency plan for if your office were to become inaccessible or your computer systems went down can prevent some loss.
5. Businesses that fail to innovate also risk losing custom; by neglecting to change, you allow other businesses to fill the niche you once inhabited.
6. Many companies also fear that they will fail to attract the best workers. An engaged workforce will promote the organisation, and are less likely to leave for other opportunities, and so your company must make it enticing for the most talented workers to choose their company.
7. Damage to a company’s reputation is another unpredictable risk to a company. With no warning, organisations have to respond in real time to prevent both economic and brand damage. An example of a brand quick to react to potential damage is McDonald’s, who effectively switched to offering healthier menu items after the release of documentary ‘Super Size Me”.
8. Increased competition makes it a necessity for your company to continually focus on innovation, brand awareness and product differentiation.
9. Finally, regulatory policies have been tightened since the 2008 financial crisis, with governments becoming more active in the setting and determining of business policies. The volume and complexity of these rules are daunting for businesses, and can be changed with very little warning.
To get further information on confronting your business fears, why not contact The Results Centre today at info@theresultscentre.com.