Management of Risk and Uncertainty in a Business
To my dear audience—the CEOs, managers, staffs, and my fellow friends and business partners—I sincerely welcome you all to this wonderful workshop. I am convinced that the information I am going to share with all of you in a short while, will have a great positive impact on your personal lives as well as your businesses and organizations. I will begin by acknowledging the fact that we live in a very unpredictable world, and business practices need to be dialed into this uncertainty. This has formed the foundation of my work for some time now. You may be aware that many companies have risk management programs which might sound similar to what I have to deliver. However, practically, those programs just address the part of the challenges which we may encounter as entrepreneurs. After going through the articles written by different authors on risk management, I have realized that whatever I am going to present is different from traditional risk management programs. Even though, traditional risk management practices are vital, but they are not sufficient to guard a business from economic risk.
It is essential that we first understand the meaning of risk and uncertainty in a business. Risk is used to describe cases of known chances or probability. On the other hand, uncertainty refers to the cases where one does not know the prospect of an event (Miller and Ken 311-31). Therefore, when talking about risk and uncertainty, it is like dealing with two ends of a single spectrum. Due to all the possible cases, as an expert, it would be easy to alert people to be prepared for anything. However, you can agree with me that life seems much easier when one assumes that all will happen as planned. Our assumptions could be wrong, but probably not. This is when we spend our energy worrying on the other possible risks. However, those black swans do happen every now and then. A company should not be worried about the risks that could arise, but should develop a flexible stance which will help it to become resilient at the time of the unforeseen.
The most fundamental approach to follow in risk management is financial conservation. A company should ensure that equity is maintained while debts are reduced. This has two distinct benefits to the business. Foremost, it will enable survival of the business in the face of a downbeat black swan. Financial conservation also helps in the occurrence of a positive black swan, especially when there is an opportunity to exploit (Wu et al. 1-7). Also, there are other actions which increases flexibility, such as cross-training of personnel to reconfigure operations quickly. A company should also design machineries and computer systems to become more adaptable to new products and markets. In addition, sales and marketing staff should be kept updated to seize latent opportunities in associated markets. Leaders should also use intermittent management meetings to update their staff members about outside events. In conclusion, despite that these strategies will vary from company to company, it is essential for every business to devise on how to achieve superior flexibility in terms of their policy and operations. Thank you for your time..
Miller, Kent D. “A Framework for Integrated Risk Management in International Business.” Journal of International Business Studies, vol. 23, no. 2, 1992, pp. 311-31.
Wu, Desheng Dash, et al. “Business Intelligence in Risk Management: Some Recent Progresses.” Information Sciences, vol. 256, 2014, pp. 1-7.