Play It Safe, or Take a Risk Abroad

1) Develop six (6) feasible strategies to minimize risk?

Risk is an inherent component of any business venture. Without risk there would be no potential for profit. However, it is necessary to minimize business risk in order to avoid loss, and investors and business owners should seek to avoid all unnecessary risks without interfering with the proper operations of the business. Identifying your risk potential and how to mitigate each risk is the basis of a sound risk minimization process.

1) In order to minimize the risk for business such as COE, they must identify the risk categories. These may fall broadly into competitor threats, industry changes, financial or currency risk, disastrous events, environmental or systemic risk, changes in their customers, and so on. Under each broad category, list specific events and sources of risk that affect their unique business and market position. Then list the probable consequences or business impact, as stated in dollar terms when possible.

2) Calculate the unminimized risk value for each item on a 1 to 5 point scale. Risk equals probability times consequences. If the likelihood of a tornado destroying your data center is a 2, but the consequences to you are a 5, the risk is a 10. In this step, assume that you have taken no action to minimize that risk and are calculating the consequences of remaining completely vulnerable to the risk.

3) List the minimization factors you have or can put into place, and to what level they shield you from the absolute value of the risk. For example, if your network is unprotected, the likelihood of it being compromised is a 4, but a firewall shields you at a level of 2. This reduces your risk probability to 2. You may have the option of several different mnimization strategies for each potential risk, and can implement one or more simultaneously.

4) Before you begin production on any item, research the market. Is your product or idea unique? Do you have a location in mind...