Risk comes hand in hand with any business. Like in any investment, the higher risk involved, the greater the reward (or loss) is at stake. However, investing in risky financial instruments, markets, or economies does not automatically guarantee great profits. Effective management strategies and the efficiency of expenditure remain to be a better assurance for success in such endeavors.
Check out our previous tips about Cost-effective Ways of Managing Your Business
No matter the undertaking, it is best to consider the intrinsic risks that come up and are unavoidable, especially in light of recent events like Covid-19.
Identifying and assessing business risk
Management of businesses in China and around the world have had to take economies to fare through the waves of augmented risk during these trying times. Some of the questions management and business owners ask to assess these risks are:
- What can happen?
- How likely is it to happen?
- What are the consequences if it does happen?
- What can be done to manage the consequences?
Risks must be identified first before they can be mitigated. This is the first step that business managers and owners must take in risk management. Once risks are identified, the probability of loss and downslope movement of revenues can be assessed. A wise manager or business owner understands that the focus of assessing risk is basically the likeliness of bad things to happen. Thus, if these unfortunate events become highly probable, it is only reasonable to assess the severity of the consequences and plan how to cushion the probable impacts.
During risk-laden times, managers and business owners need to double efforts to wade through uncertainty and loss. They must push through economic struggles and maximize returns, manage risk inherently associated with a pandemic, and ensure the continued health of their business and its workforce.
Uncertainty and loss
Some of the uncertainties that businesses’ assets are facing these days include:
- Triggers for impairment testing;
- Challenges in estimated cash flows;
- Risks in the discount rates applicable to borrowings and other financial instruments.
Significant global changes are taking place in the immediate market of all companies which means that the assessment of assets’ values may arise. By doing so, it is foreseeable that many companies face losses. It is imperative that business owners, domestic and abroad, prepare for these losses.
Maximizing returns
Although there is a pandemic, it does not necessarily mean that business will not return as usual. Nevertheless, some sectors have been significantly hit by COVID-19 more than others. These sectors may include:
- Travel and tourism;
- Makeup and self-care;
- Entertainment;
- Education; and
- Manufacturing.
These industries may have yet to revive their economic presence but others have done well despite the difficulties. Some of the sectors that may be succeeding to survive include:
- Domestic and cross-border online shopping;
- Food and beverage deliveries;
- Cleaning and sanitary products; and
- Pharmaceuticals.
No matter the condition of your business, it is important to maximize whatever returns come your way. With this in mind, managers are expected to turn various aspects of business into a more beneficial situation. For instance, revenues from business operations, dividends from the investment of stocks, insurance claims, bond returns, etc. may be able to generate future economic benefits in the long run.
The continued health of the business and workforce
It is not all about the bottom-line. Profits are good but the business in its entirety and its workforce is what generates profits, so these must be cultivated properly as well. The company’s reputation, the way it handles its customers, the confidence of its staff and employees, and its standing with competitors are what make a company stay afloat. During times like these when profits are slower than usual, making sure that the company is in good standing with its immediate environment is what makes it last.
Managing risk in business
Managers and business owners need to consider many options in terms of managing risks:
- Is it avoidable?
- Or, is it controllable?
- Will we be able to cope if we do assume the risk is not controllable nor avoidable,?
- If not, is it transferable?
There are many scenarios and angles to choose from when managing risks. Good management and common sense dictate that risk can be avoided at first sight. But as most “old-timers” know, with great risk comes great reward (if managed correctly). It is important to have experts who have fared through similar situations and know the regulations that will aid you in mitigating the risks involved.
Risk management services
The S.J. Grand financial advisory team has extensive experience in helping its clients to uncover and manage risks. We offer the tools to handle credit, market, and operational risks that are common in China. We specialize in risk analysis of strategic accounting and tax issues, implementing risk management solutions into business planning, assessing operations and investment opportunities through cost-benefit analysis, and developing ongoing risk-monitoring processes.
Our firm has withstood the test of times during the SARS crisis and there are many lessons learned amid the struggle. We have extended our support and advice to many foreign clients who went through difficult times as such. Our past experiences and expertise may assist you in managing and assessing associated risks in your business, no matter the size or industry you are in.
Conclusion
Risk is not completely avoidable. There may be instances when decision-makers choose not to face certain risks but in the lifetime of any business, it is imperative that risk assessment and management be ensured for the longevity of the company’s goals. No matter the issue, being able to cope with risks bears the fruit of resilience. It may not be successful in the first instance but the experience and learning process involved may be used for future scenarios. It is important to have experts at your side to verify the implications of certain risks and to help you cope with the consequences that may follow.
Contact us
Managing your business during these difficult times may put you to real exhaustion, and at the brink of giving up. However, S.J. Grand’s expertise and previous successful experience will guide you to make the right decisions for your business. Contact us to avail of our special services.
Moreover, if you are interested in taking advantage of our latest remote work solution, go to our Kwikdroid page to request a demo and see the prices and packages we offer.
