business risks

The Corporate Policy of Integral Risk Management seeks to preserve business integrity while maintaining the sustainability of the business, for this reason it is in charge of monitoring, evaluating the risks to which the company may be exposed and the risks that may benefit it for the fulfillment of its objectives and thus be able to determine the effect on the financial statements.

To have a good performance all companies must have a risk team, which implements policies that seek business progress.

The risk team must analyze the economic variations of the sector, the regulations in which it must submit, the social and environmental aspects and the rights that must be enforced, among others.

A risk is considered to be any uncertain event, which may affect the objectives and business resources.

Although the expected and ideal would be not having to face risks in the operational course, it is an ideal that is very far from the business reality. Since being a constant operation is exposed to the effects it can cause in the surrounding area, since everything is changing and is growing globally and competitively, this is why by counting companies with risk policies, it allows them to handle situations in a fast, effective, and possible way.

Some of the business risks that exist, which will vary depending on the size of the company or the sector, are:

External risks

They would be those risks presented by what is in the environment and that influence or condition directly or indirectly to the progress of the company, and may even become real threats to the company.

Some of these cases may be for example the business cycle, since the economy is in a constant and expanding, in addition there may also be crises, this being something that may be beyond the control of companies becomes a risk As it adds value, it faces big policies and the implementation of new forms of production to be able to continue in the competition. It is also at risk when selling the products in other countries, since it faces currency exchange, difficulty to make the collections in addition to the customs controls. Variations in interest rates and mistrust in the market, which cause a credit risk. At the same time, changes in regulations and laws.

The location risk can also be presented. This type of business risk will depend on where the company is located, and the specific regulation. The risk here can be given in terms of local refers, representative offices, commercial, factories, among others.

There is also the risk of major forces which is beyond the control of the company, such as catastrophes and natural disasters, fires, earthquakes, wars, etc.

Internal risks

are those business risks that depend on the management that is made of the company itself, arise due to poor administrative management, lack of planning processes or poor working environment, we find:

Sales dependence. Which means that sales depend on very few customers or, even, only one. In case there is a minimum problem due to the quality of our product, the price or the service.

Lack of diversification of activities, Operational risk, the risks committed by errors, failures or internal processes that cause losses to the company. It is important to register our brands to avoid the loss of intellectual property, it is important to diversify not only in customers, but also to suppliers.

It is important to avoid internal risks investing in the facilities, will mean a reduction of costs in the medium term and the realization of products or services of better quality.

Another risk that can be presented internally is the lack of liquidity may also be having to count on organizations with strict processes of hiring, training, promotion and communication in order to avoid possible fraud that alter the stability of the company, in addition to exaggerated inventories in the warehouse, or investments that have not yielded the expected results

The classification of business risks is not the same for all companies since not all companies will live and be affected by the same risks. For this reason, it is important to have strategies to deal with the risks, no matter what, in order to minimize the impact, for this reason it is important to make a risk map to know what the company's weaknesses are and determine which are the threats that they may have in the course of business operations. Like any risk, the business should be treated promptly and in a special way, based on business policies when analyzing the type of risk, whether external or internal, you must first know what the risk is, how it can be mitigated, and finally apply the solution against the problem. When a company does not have a transparent and reasonable audit team, there is a greater likelihood of facing operational or financial risks. It is the obligation of managers to ensure that companies are ready to face the risks and solve them in the best way possible, seeking that organizations do not have negative effect for the threats.

It is worth mentioning that despite being in search of mitigating risk, this risk also becomes a facet that is sought by managers to be able to use it to meet the desired objectives.

Companies can express their appetite for risk as the acceptable balance of growth, risk and return, or as a measure of value added for shareholders adjusted for risk. This way you can implement the risk by using a risk map.

Being this search for risk the amount that are willing to face, the amount of risk that an organization is willing to assume to achieve its strategic objectives.

.

When determining the level of risk that the company will face, it will be known how many resources and efforts are required to manage it and mitigate a possible impact. In this way financial risks are prevented. An example of this is the investments that the company makes.

We can conclude that risk is an aspect that must be treated promptly but at the same time having the correct knowledge of the company, the risk can be used for business benefit.

by:

 Estefany pinto 

Norma guerrero

Wilson baquero

references
http://www.bolsamercantil.com.co/Portals/0/xPlugin/uploads/2018/2/20/GR-RG-01-Reglamento-Comite-de-Riesgos.pdf
http://www.redalyc.org/articulo.oa?id=64612241006
https://www.riesgoscero.com/blog/que-es-apetito-al-riesgo

https://www.incp.org.co/diferencia-entre-apetito-de-riesgo-y-tolerancia-al-riesgo/
https://www.economiasimple.net/glosario/riesgo-empresarial

http://www.simplycsr.co.uk/what-is-sustainable-business.html