Business risk management is the process of identifying, assessing, and controlling threats to a companys capital, earnings, and operations. It is an essential factor for the success of any business, whether it is a large company with an entire risk management process and strategic risk management department or a small business owner that looks into risk management themselves. Business risks can have negative or positive impacts, and some risks may represent opportunities. Companies invest time and money in business risk management, but often treat it as a compliance issue with rules and regulations for employees to follow. However, rules-based business risk management alone cannot diminish either the likelihood or the impact of a disaster and can also lessen a company's ability to seize business opportunities that may involve some degree of risk.
Business risks can come from various sources, including financial, consumer taste and demand, the state of the overall economy, and government rules and regulations. While companies may not be able to completely avoid business risk, they can take steps to mitigate its impact, including the development of a strategic risk plan. Identifying risks is a key part of strategic business planning, and risks are identified through a comprehensive analysis of a company's specific business activities. Risk control is a technique that utilizes findings from risk assessments within a company to reduce the risk found in these areas. When a risk becomes a reality, a well-prepared business can minimize the impact on earnings, lost time and productivity, and negative impact on customers.
