Risk are common in day to day business life. The business find out all the possible ways to eliminate or at least minimise the effect of risk. Many business people believe that larger the risk greater the profit and they prefer to take more risk to get more profit in the business but they simultaneously work towards minimizing the negative effect of risk. There are several method by which business risk can be minimised.
Following are different ways to handle the risk :-
1.Reduction of risk:-
This method of risk minimisation is adopted by the most of marketers. Many risk are neither transferrable nor avoidable but market risk can be reduced by the concentrated efforts of marketer. market conditions are very difficult to predict but some of the following measures can be taken in order to reduce the risk.
- When a business face losses due to change in the fashion, taste and preference of the consumer , this losses can be reduced by offering the product at a certain discount to clear the old stock and fill the stock with product which market requires.
- If the market is facing loss due to change in the marketing condition this can be easily minimised by finding out the exact change which is the reason for the loss by doing a market survey or research.
- There must be innovation in the business which consist huge risk but at the same time it may lead to progress and progress of the business can not be possible without innovation.
- In the mean while the organisation must do amalgamation of the firm, conversion to company which help the organisation to improve managerial ability, financial strength etc.
2. Prevention of risk
It is the method and technique which help the management to prevent the unnecessary risk in the business. It is often said that" prevention is better than cure" and this methods and techniques allow marketers to eliminate risk or causes of the risk. There is no such mantra( formula) to eliminate the risk completely but it can be reduced by taking some preventive measures. Following are some of the preventive measures which are taken by the marketers to prevent the risk.
- When the demand for product reduced it can be regulated by effective sales efforts through trade marks and brands the risk from loss from sales can be prevented.
- Sometimes market face loss due to theft, shop lifting etc. these losses can be avoided by giving training to the employees not only this organisation can prevent these risk by burglar alarm, watchman etc.
- The loss also arise due to overstocking and understocking of the product, the organisation must produce the product to meet the demand of the customer, they should train the employees to keep their eyes on the stock which should not be understocking or overstocking. Overstocking can block the capital and arise wastages, understocking can result in the loss of profits.
- Many a time marketers face the risk due to price fluctuation due to lack of knowledge about the demand and supply in the market. The marketers should be aware about the market fluctuation to overcome the loss due to price fluctuations.
- To avoid the loss from bad depts creditableness of the party should be known before the granting the credit.
- Risk from fire can be avoided by using fire proof material for stocking of the product.
3.Shifting of the risk
Other than reducing and preventing the risk the management can also shift the risk of their business to another shoulders, there are many professional agencies who accept such risk on the behalf of other organisation in return they charge some commission. In the world pf business there are many risk and losses. Sometimes they are not able to bear such risk and want to transfer the risk to others. These risk can be shifted to insurance agencies by insure their businesses. Insurance companies cover many risk for the payment of a sum known as premium, Fire insurance, Marine insurance, Credit insurance etc. So the businesses can easily transfer the risk to the insurer by agreeing to pay some amount of commission to the insurer.
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