Financial risk is present in every business and cannot be completely avoided. Itis damaging to the business and threatens its market survival if not arrested in time. Being aware of these risks helps you to understand their impact on your business, and you get to know how to manage them effectively.
Kavan Choksi UAE – Managing risks in the business
Kavan Choksi UAE is an experienced entrepreneur who has valuable experience and skills in finance and business leadership. According to him, risks need to be managed with-
- Planning;
- Relationships;
- Hedging;
- Discipline.
They have been briefly described below-
- Planning- This is the first step, and it goes the extra mile in risk reduction.This stage is vital and should include-
- Studies for feasibility (viability of new projects)
- Planning for business (business plan)
- Projections of cashflows
- Financial planning
- Project planning
- Relationships- When the business assesses the risks, they tend to forget about the human elements involved with the company. This can be one of the most dangerous risk factors. Specific relationships that are crucial for the business are-
- Customers
- Suppliers
- Employees
- Financiers
- Other company stakeholders
- Hedging- The primary goal of hedging is to circumvent any probable negative effect on the business with an action,a product, etc. The term “hedging”exists in the financial domain, but it needs to be implemented by working smartly. It can also be achieved to some degree on the operational level. Some of the key ways to hedge business operations are given below:
- Products
- Manufacturing
- Customers
- Financial
- Distribution
- Geography
- Seasonality
- Information and communication technology
- Discipline- It reduces risks from all the aspects of the business and should be applied in the following areas-
- Expenditure
- Debt
- Growth
- Cashflow
If the above risks are not managed properly, the business can fail and collapse. Experts in business and financial management should be consulted to combat the risks of the company with planning and relevant strategies.
The need for risk management strategies
There should be risk management strategies to combat the element of risks in an organization. This strategy should contain the following five elements to ensure it works well for the business with customized solutions-
- Avoidance of the risk
- Retention
- Sharing
- Transferring, and
- Loss prevention and reduction.
The risk management strategy should be structured for addressing risks. Every company, both small and large, should have a structured approach to risk management. The risks have to be identified and assessed. They need to be managed well and monitored too.
According to Kavan Choksi UAE, financial risks are inevitable for any company. There are risks to projects and business operations. In the absence of any risk management strategy, the business will fail and collapse. In the matter of business finance, experts should be called in to understand the business well. They devise custom solutions when it comes to eradicating risks and keeping them at bay.
When you are choosing financial experts for your company, ensure they have proven track records in your business niche. It is prudent to take their advice for identifying and keeping financial risks at bay.