Risk Mitigation

When an Entrepreneur hears the word risk it does not concern him or her, since the very definition of an entrepreneur is one who takes considerable risk and initiative in starting and managing a business.

Some people perceive risk mitigation as something you obtain insurance for. That is partly true, but risk mitigation is more than that.

An astute Entrepreneur needs to assess and mitigate risks in numerous areas as many of these risks might not be covered by insurance. Such risks could be economic, governmental, client-related, competitive, employee-based, management turnover, process failures, unmanaged growth, and so on.

Entrepreneurs should take time to evaluate non-insurable risks facing their business and develop contingency plans to mitigate such risks.

Ravi Patel

 

Published in: on May 2, 2011 at 5:53 am  Leave a Comment  
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Mitigating Risk versus Reducing Costs in the Supply Chain

Reducing the cost of goods and services is an important goal for every business, especially in a competitive environment in a depressed market. Entrepreneurs should strive to improve gross margins by reducing their costs, but is this always the right focus?

Mitigating the risks associated with your critical supply chain, whether for procuring raw materials or goods or employing people who provide services, is more important in the long term than just reducing costs.

While one might be successful at lowering costs through tight controls, wage freezes, and aggressive negotiations, if the risks inherent in procuring such goods and services are not mitigated, there is no assurance that you would continue to receive such, regardless of cost. Short-term cost reductions might be replaced by higher replacement costs if the original supplier of the goods or services is incapable of delivering them or choses not to.

Entrepreneurs need to work with their supplier of goods and services (including employees) to find ways in reducing  risks for continued and reliable delivery of quality products and services for the long term. Foregoing short-term cost saving by gaining longer-term reliability of your supply chain is more critical for your success.

Ravi Patel

 

Published in: on August 30, 2010 at 5:40 am  Leave a Comment  
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