Post by account_disabled on Mar 6, 2024 1:20:28 GMT -5
The you eliminate the chance of incurring losses. But the disadvantage is that you also lose out on any benefits too. Risky activities can be very profitable or perhaps have other benefits for your company. So this strategy is best used as a last resort when youve tried the other strategies and found that the risk level is still too high. Reduce the Risk If you dont want to abandon the activity altogether a common approach is to reduce the risk associated with it. Take steps to make the negative outcome less likely to occur or to minimize its impact when it does occur.
With our earlier case Key client Corp is late paying its invoice for example we could reduce the likelihood by offering an incentive to Job Function Email List the client to pay its bills on time. Maybe a discount for early payment and a penalty for late payment. Dealing with latepaying customers can be tricky and we covered it more in our tutorial on managing cash flow more efficiently but these are a couple of options. In the same example we could reduce the impact by arranging access to a shortterm credit facility. That way even if the client does pay late we dont run out of money.
For more on shortterm borrowing options like factoring and lines of credit see our tutorial on borrowing money to fund a business. This is probably the for a wide range of different risks. It lets you continue with the activity but with measures in place to make it less dangerous. worlds. But the danger is that your controls are ineffective and you end up still suffering the loss that you feared. Advertisement Transfer the Risk Were all familiar with the concept of insurance from our everyday lives and the same applies in business. An insurance contract is basically a transfer of risk.
With our earlier case Key client Corp is late paying its invoice for example we could reduce the likelihood by offering an incentive to Job Function Email List the client to pay its bills on time. Maybe a discount for early payment and a penalty for late payment. Dealing with latepaying customers can be tricky and we covered it more in our tutorial on managing cash flow more efficiently but these are a couple of options. In the same example we could reduce the impact by arranging access to a shortterm credit facility. That way even if the client does pay late we dont run out of money.
For more on shortterm borrowing options like factoring and lines of credit see our tutorial on borrowing money to fund a business. This is probably the for a wide range of different risks. It lets you continue with the activity but with measures in place to make it less dangerous. worlds. But the danger is that your controls are ineffective and you end up still suffering the loss that you feared. Advertisement Transfer the Risk Were all familiar with the concept of insurance from our everyday lives and the same applies in business. An insurance contract is basically a transfer of risk.