The rise and fall of companies on the market is something we became used to
. Their failure remains sometimes a mystery even for them and they keep wondering what is the secret of the mammoth companies which hold on against all the problems and the changes.
The right thing to do when you think about your business is to be very pessimistic. To expect the worst. Risk managements conducts an analysis which reveals the risks your company may stumble upon.
Unhappy events always happen. Nevertheless it is better when they are are anticipated, because their effects on your business can be minimized and controlled. The following example illustrates in a very practical manner the way risk management works. The villagers living along a river know that a major rain will cause the river to grow and flood the entire village. To manage this risk they decide to build a dam. So they are prepared for the rain in the best possible way. Even if the rain will make the river grow more than anticipated, only a small amount of water will go over the dam. The damage will be considerably smaller than in the case where their village had no defense against natures rage.
There are several risks which represent a menace for a company: project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from competitors. Risk management consists of transferring it to another party, avoiding it or accepting it and being prepared for its consequences.
Risk management consultants are persons with wast knowledge concerning the various risks which might appear in a certain economic field. They must always keep up with the changes and the new range of risks a company might encounter. When asking the advice of a risk management consultant a company puts its trust in that person. Therefore the mission of that person is to be able to anticipate with accuracy the highest risks and the lowest risks which might occur. The presentable and professional appearance are a plus for risk management consultants in terms of reliability.
Risk management consultants must be selected from intelligent and active persons. With the right training and education they will be able to persuade people to protect their businesses in the best way possible.