Uncontrollable factors that affect business planning

September 1, Derrick Myers 0 Comments What you must know when you begin the money game!

Uncontrollable factors that affect business planning

Throw in potential disruptions to supply chains that have been stretched across thousand of miles and country borders by globalization, and the opportunity for something to go wrong is, to say the least, worrisome.

Financial executives, who have not done so already, should begin to develop a holistic risk management program or one that allows them to mitigate and manage risk on a broad front. Organizations who are tempted to short change their risk management efforts will find potential consequences can be severe, from a loss of competitiveness to, in the extreme, having to cease operations altogether.

Usually the probability of that event and some assessment of its expected harm must be combined into a believable scenario an outcome which combines the set of risk, regret and reward probabilities into an expected value for that outcome.

In scenario analysis "risk" is distinct from "threat. In information security a "risk" is defined as a function of three variables: If any of these variables approaches zero, the overall risk approaches zero.

For example, human beings are completely vulnerable to the threat of mind control by aliens, which would have a fairly serious impact. But as we haven't yet met aliens, we can assume that they don't pose much of a threat, and the overall risk is almost zero.

Is the risk negligable, this is often called a residual risk. It entered finance in the s when financial derivatives proliferated.

uncontrollable factors that affect business planning

It did not reach most professions in general until the s when personal computers proliferated. Governments are apparently only now learning to use sophisticated risk methods, most obviously to set standards for environmental regulation, e.

Risk management Risk management involves identifying, analyzing, and taking steps to reduce or eliminate the exposures to loss faced by an organization or individual. The practice of risk management utilizes many tools and techniques, including insurance, to manage a wide variety of risks.

Every business encounters risks, some of which are predictable and under management's control, and others which are unpredictable and uncontrollable. Risk management is particularly vital for small businesses, since some common types of losses—such as theft, fire, flood, legal liability, injury, or disability—can destroy in a few minutes what may have taken an entrepreneur years to build.

Such losses and liabilities can affect day to day operations, reduce profits, and cause financial hardship severe enough to cripple or bankrupt a small business.

But while many large companies employ a full time risk manager to identify risks and take the necessary steps to protect the firm against them, small companies rarely have that luxury. Instead, the responsibility for risk management is likely to fall on the small business owner.

The term risk management is a relatively recent within the last 20 years evolution of the term "insurance management. Risk management is now a widely accepted description of a discipline within most large organizations.

Basic risks such as fire, windstorm, employee injuries, and automobile accidents, as well as more sophisticated exposures such as product liability, environmental impairment, and employment practices, are the province of the risk management department in a typical corporation.The Public Inspection page on heartoftexashop.com offers a preview of documents scheduled to appear in the next day's Federal Register issue.

The Public Inspection page may also include documents scheduled for later issues, at the request of the issuing agency.

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Risk - Wikipedia