Eliminating risks in a business is impossible, but being able to manage those risks is a smart way to prevent unexpected threats that may be imposed on the business. A business owner should always be able to make a smart decision on how to retain any risks that may occur, they should be prepared for risks that may happen and have skills and the ability to come up with ways of managing the risks.
Risk management is the process of identifying, assessing, and controlling threats to an organisation’s capital and earnings.
According to Helene Uwineza, a crochet business owner, being able to manage risks is very crucial to business owners because they are more ready and prepared for potential risks that may hinder a business’ growth or progress.
"A business owner who has the ability to think ahead of the risks is creating security for his or her business. Of course you can’t eliminate all risks but putting strategies that will prevent the risks from causing harm to the business is very important, by doing so you prepare for eventualities that may come in the way of progress and growth. When a business evaluates its plan for handling potential threats and then develops structures to address them, it improves its odds of becoming a successful entity,” she says.
Uwineza continues, "Risk management provides the necessary information to the business owner that helps in making informed decisions about how to manage the risks, and also ensuring that your business remains profitable.”
How to manage risks in a business
Eugene Rubayita, a furniture business owner based in Kigali, says that to be able to manage risks is to look back at past events.
"Every business owner has met challenges and problems while on the journey, as a business owner you have to define all risks, and identify if you have had similar situations and experiences, after looking back look for solutions, create backup plans for different issues, and scenarios and be flexible enough to adjust your decision,” he explains.
Rubayita shares some ways on how to manage risks in a business:
Trust your intuition: Calculate risk and determination of mitigations and make a Plan B for consequences, never push back the idea that there might be a problem incoming or that there might be something fishy in the business.
Research and assess market trends: The future is always uncertain, business owners must research the market that exists today and understand its functionalities, and also research the trends, and then evaluate the information that they acquired and make a decision.
Engage regularly: Managing uncertainty requires being engaged and remaining informed so decisions can possess the flexibility needed to accommodate change. Being engaged with customers, regulators and suppliers enable you to help shape their direction in a manner positive to your business.
Embrace and accept change: Embracing change is very important for business owners because change is inevitable, they should embrace change as the market will change, in good times or tough times. Accepting change can enable business owner able to pivot when needed to adapt to new norms, new regulations, and other conditions.
Determine if you can manage the risk: Weigh the risk and determine if you can manage it. Start by identifying and evaluating risk, which includes assessing its probability and impact. What do you then do with it? Based on your cost-benefit analysis, you may choose to accept it, take steps to reduce it, or transfer it to someone else.