What is risk assessment? Financial risk assessment is crucial for any business. One thing that is constant in any business is the implementation of strategies and planning. Every new problem faced by a business requires management to modify the strategy, while every new growth step needs execution of a new plan. Every strategy or plan is implemented with the confidence that it will take the business forward. Then why do problems occur or disasters happen? They arise due to poor management and the absence of forethought.

Any strategy or plan implemented without forethought might pose a series of problems and result in complexities that can boggle even the best expert. Problems can also lead to disasters, such as financial loss, loss of customer confidence or, at worst, failure of the business. To mitigate the probability of such disasters occurring in your business, it is extremely important to undertake risk assessment. Business risk assessment is used to identify and measure the significance of a business risk and probability of these risks occurring within a function or specific process. Business risk assessment will ensure that you have plans ready to counter issues that could crop up, resulting in the success of your business.

Why do I need business risk assessment?
The purpose of risk assessment is to identify the inherent risk of performing various business functions, strategies or plans. Once possible risks to a business are identified, management can gauge their extent and plan the type of controls required to mitigate the risks. Thus, business risk assessment:
Is needed to ensure the success of your project or business.
Helps you plan for extreme events by bringing forth possible risks.
Helps you focus resources to manage probable risks.
Helps control business costs.
Helps strengthen business management. Once you know the risks to your business, you can implement multiple processes to reduce the probability of the risks affecting the business.

Conducting business risk assessment will also help develop the edge you need over your competitor, apart from enabling you to improve your brand presence in the market. You can avoid financial losses in your business by undertaking financial risk assessment.

Do I need help in undertaking business risk assessment?
Proper risk assessment ensures that you capitalize on growth opportunities to the maximum. In-house personnel are, however, not always the best people to rely on to conduct risk assessments, since they might fail to consider that their business strategy or plan is prone to certain extreme risks. They might not appropriately consider threats to the business from competitor moves and changes in the global market cycles. This is where an external consultant comes to your aid. They can help you effectively undertake business risk assessment, while providing you comprehensive insight into the numerous risks, threats and changes that can negatively impact your business. You also receive a framework to help you effectively utilize your cash reserves and other resources to benefit your business to the greatest extent possible.

copyright Gary W Patterson 2008