How To Manage Risk As An Entrepreneur

Alfiansyah Clark - TP075566

Figure 1: Root Cause Analysis Representation (Visual Paradigm, n.d.)   

Risk management is a critical skill for entrepreneurs, allowing them to navigate the uncertainties of business ventures effectively.  In the digital world especially, with digital threats like cyberattacks, digital breaches and system vulnerabilities, being able to constantly test, assess and evolve their businesses and products is essential to try an assess the various types of risks such as: Cybersecurity, Legal, Operational, Data, strategic and third party. (Kost, 2024)

One of the tools that can be deployed is Root Cause Analysis. This is a structured problem-solving approach that aims to identify the fundamental reasons behind an issue or problem by breaking down the system to address the causes of an issue as opposed to finding a solution to an issue. (Brown, 2023)

In order to do this first the user must identify and understand the problem, knowing what you are trying to fix greatly enhances your ability to provide the correct diagnosis later on.

Then one must break down the event into causes and symptoms. Causes refer to the underlying reason behind the issue, whilst symptoms are the visible effects of the problem. This is important as “only treating the symptoms runs the risk of getting sick again” (Davis, 2024)

Now once the cause has been identified one can now address the cause of the issues/risk. By understanding the root cause, one can now take direct action to address it. Tackling the root cause basically allows for the prevention of similar situations in the future. (Gerge, 2023)

In summary, Root Cause Analysis breaks down issues into a simple and logical format, allowing for a more effective and long term response to help mitigate and reduce risk.

References

Brown, L. (31 December, 2023). Top 8 Risk Management Tools and Techniques in [2024]. Retrieved 5 April, 2024, from Invensis: https://www.invensislearning.com/blog/risk-management-tools-techniques-in-pm/

Davis, J. (10 Aprl, 2024). How to implement root cause analysis (RCA): Explanation and examples. Retrieved 11 April, 2024, from eputra: https://eptura.com/discover-more/blog/root-cause-analysis/

Gerge, T. (7 January, 2023). What Is Root Cause Analysis? | Definition & Examples. Retrieved 5 April, 2024, from Scribbr: https://www.scribbr.co.uk/the-research-process/the-root-cause-analysis/

Kost, E. (18 January, 2024). How-To Guide: Digital Risk Managment for Businesses. Retrieved 4 April, 2024, from UpGuard: https://www.upguard.com/blog/digital-risk-management

Visual Paradigm. (n.d.). How to use 5 Whys Tree Diagram for Root Cause Analysis? Retrieved 11 April, 2024, from Visual Paradigm: https://online.visual-paradigm.com/knowledge/root-cause-analysis/how-to-use-five-whys-tree-diagram/

 

Badr Abduldaim - TP074644

(Forbes)Getty

We as humans must make decisions every day and everywhere, sometimes we will have difficulties choosing what decision to make based on a verity of factors, the more hesitant we are the more serious the situation is, and making the wrong decision could lead to defeat, loss, anxiety or the only thing terrifies the most which is regret.

 I am going to introduce you to risk management which involves making risky decisions to achieve certain goals trying to succeed in the competitive business world, we must make sure that the risk we take as an enterprise is worth or will have some value upon taking. Taking a risk is not always a bad move, it emphasizes the strategic planning and critical thinking in the company.

"We don't manage risks so we can have no risk. We manage risks so we know which risks are worth taking, which ones will get us to our goal, which ones have enough of a payout to even take them," Forrester.(Linda Tucci,2023)

"The pandemic is a great example of a risk issue that is very easy to ignore if you don't take a holistic, long-term strategic view of the kinds of risks that could hurt you as a company," Shinkman said. "A lot of companies will look back and say, 'You know, we should have known about this, or at least thought about the financial implications of something like this before it happened.'"(Linda Tucci,2023)

references:

Linda,T. (2023). what is risk management and why is it important from :TargetTech

https://www.techtarget.com/searchsecurity/definition/What-is-risk-management-and-why-is-it-important 

Abdirahman Warsame

Figure 1: How to manage risks.

Part of being an entrepreneur is to take risks, there are many ways of taking risks but one crucial one is by conducting a risk assessment.

Conducting a risk assessment is an important step in the risk management process for entrepreneurs. It entails assessing the likelihood and severity of potential risks to your business. A risk assessment allows you to identify the areas of your business that are most vulnerable and prioritise your risk management efforts. (Contentfy, 2024)

There are several approaches to conducting a risk assessment, including brainstorming sessions, SWOT analysis, and decision trees.

The key is to take a systematic approach that addresses all aspects of your business and takes into account both internal and external factors. During a risk assessment, you will consider each risk's potential impact on your business, including financial, operational, legal, market, and reputational implications. A comprehensive risk assessment allows you to identify the risks that pose the greatest threat to your business and create a plan to effectively mitigate or manage them. (Contentfy, 2024)

 

 

References

Contentfy, A. (24 March, 2024). How to manage risk as an entrepreneur. Retrieved from aicontefy: https://aicontentfy.com/en/blog/how-to-manage-risk-as-entrepreneur