Problems are not terrible when the risk diversification is applied

Any business, any commercial activity is dangerous. It is characterized by numerous risks from different spheres. This may be the risks caused by changes in the political environment, or the risks created by the difficult economic situation, and, after all, no one excludes the possibility of extraordinary natural circumstances that can reduce all the activities of the firm to "no."

This all is a brake lever in business, numerous businessmen are afraid of even the smallest risks, being afraid to face them face to face. But this is unreasonable fear! From any situation you can go out, so with any risk you can fight.

An excellent solution in the fight against risk can be diversification of the enterprise. What does it mean? Diversification of activities implies that the organization has waste ways that some risks can be compensated by success in another direction.

For example, the company delivers bananas to the market, but in some years a terrible crop failure of this overseas fruit has happened. The organization was in a difficult situation. But the company's management had to foresee the possibility of a crop failure, so a competent decision would be to diversify the activity, that is, start supplying more apples, pears and peaches. Even if there is a bad harvest of bananas, the organization can always stay afloat by selling other products.

It is for this reason that every company should avoid monopoly in its activities, because this can lead to bankruptcy. And certainly no one company does not want to achieve it.

But not only a variety of products can keep the organization afloat. Diversification of risks is also an excellent move to manage the situation of uncertainty in the enterprise. What does risk diversification involve?

Each enterprise should constantly monitor possible risks, monitor the changing situation on the market and calculate the likelihood of an event. It is for this to be carried out that risk diversification, that is, from division. And the more details the risks are divided, the easier it is to manage them.

Diversification of risks involves the creation of a risk tree or their matrix, in which all possible events will be collected: first, larger, then finer.

For example, the larger risks can be presented as economic, political, natural, social, commercial. But each of these risks can be divided into smaller ones. Consider the division of economic risks.

1 - change in the exchange rate;

2 - lack of funds;

3 - high accounts payable;

4 - lowering the price of a similar product from competitors;

5 - increase in the price of raw materials and many others.

Diversification of risks makes it possible to break potential threats into smaller problems, a plan for solving which can be developed in advance. For this purpose, such measures are implemented. Managers who engage in risk management can see in advance possible threats to the effective operation of the enterprise and develop a plan of solutions that can save the situation in time.

Diversification of risks, of course, does not preclude their occurrence, but it allows the company executives to react in time to the upcoming changes and make an adequate decision without panic and fear of losing everything.

Given these reasons, the diversification of risks seems to be quite a conscious and appropriate method for managing the organization. But the difficulty lies in the fact that few specialists are able to predict possible risks and calculate their likelihood of occurrence. Nevertheless, universities are already training specialists in this area, and the experience of the organization will be able to largely help in hard work to combat emerging risks.