Creating Value With Risk Management

Creating Value With Risk Management

Risk is a part of any business venture. It’s vital for any business owner to find viable ways to manage the various risks. 

By finding ways to manage value and risk, entrepreneurs may be able to figure out the best ways to create wealth. By identifying key value drivers, value and risk management goes a long way towards the ultimate ways of protecting what brings the most value towards the organisation. 

By coming up with ways to measure and monitor these drivers, business owners are able to keep track of the best ways to bring revenue into the organisation. 

There are ways to respond to the risks, including: 

  • Transfer 
  • Tolerate 
  • Treat  
  • Terminate 

For Brenda, expanding her fashion business to online platforms has created further revenue streams.  She has identified the value in going this route but is also fully aware of the risks involved. As she tries to acquire new customers she also aims to retain existing ones.  

The skill of managing value and risk is usually learned by experience. Creating value with risk management is something that can be done through quantitative stress testing. 

Brenda would be wise to create a plan for herself and to test out various models on her existing clientele while also trying them out on her new clientele. If these models survive under this stress test, then it may be proof of value. 

Risk management means that she will have to work out how her business could potentially lose if things don’t go according to plan. She will then need to develop a plan for ways to deal with the resultss, whether positive or negative. 

Creating value with risk management is never easy but when done correctly, it’s worth it.  

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