Business Risk

 

If we start with what things are associated with risk, then probably we’d list down each and everything that exists. But if we talk about the amount of risk that is associated with something, we’d get varied results. So can we say that risk is inevitable? Yes, certainly. But a prudential person knows that risk, though being inevitable, can be managed because as it is rightly said, profits are the reward for taking calculated risks. Infact, ‘The biggest risk is not taking risk at all!’

Likewise, if we talk about business risks, that’d arise on a regular basis, a person needs to predict the risk that can pop up in the changing business environment and start preparing for it so that he can knead himself a cover for the harsh and uncertain future.

A question then arises: “how can I prepare myself for the unforeseen challenges?”

These unforeseen challenges can be managed in four ways:

  1. Avoiding the risk: You can avoid the risk by doing no activity or stopping the ongoing activities all at once. But this is not possible as you have to perform some activity in order to earn a living
  2. Risk reduction: You can reduce the risk by taking precautions and improving the work efficiency, but risk can only be reduced up to a certain level.
  3. Accept the risk: You can accept the risk and choose to do nothing about it, but you have to evaluate for how long your financial capabilities will allow you to undergo such damages?
  4. Transfer the risk: The best way to manage the risk is to transfer the burden of it on a third party and this is where insurance consultants pave a way! 

If you ask an average individual about the term “Insurance”, he’d probably come up with life insurance policy or the insurance of his car which the manager at the store gave him or asked him to buy. He wouldn’t really be aware about how he can cover his business under insurance policy and save a large part of any financial losses.

Business Insurance:

Business insurance coverage protects businesses from losses due to events that may occur during the normal course of business. There are various types of insurance for business including coverage for property damage, legal liability, employee-related risks and most importantly fire insurance and trade credit insurance. Being a choice given, who’d not want to share the burden of financial exposures? But who all have the correct knowledge about how to save the business in the events of loss? Apparently, only a few of them. So why not consult the financial experts? It would indeed mark as a correct decision towards your financial accuracy.

Knowing that you can insure your business for your own benefit is not enough but evaluating and selecting the best insurance policy plays a very significant role. And as Warren buffet rightly quoted, “In the business world, the rearview mirror is always clearer than the windshield,” signifies the uncertainty ahead and clearly throws light on the importance of business insurance.

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