Question

What often happens when we are ignorant of how to manage risk in business or in life? (risk management)

Answer 1

Effective risk management helps in anticipating the damage or harm that can be caused to us or our business in the future and being well prepared for it. It helps us to move forward in a cost-effective and efficient way. The consequences that can occur from ignorance of risks and its management can be small to affect a part of a business or such huge that can result in the business closure.

The effects of ignorance can be seen by the risks that the business will face. Non-compliance of the regulations and legal formalities of starting or running a business can lead to lawsuits which can be difficult for the business to deal with. There can be fines and fees and even order of immediate closure of the business.

Not predicting the market fluctuations and share market conditions can cause great losses which can ruin the company financially. Theft is another risk which the business and human in personal life have to care about. Theft can take place from outside robbers or even employees in the company. Having mediums to check on their actions is important to keep the organization safe from such practices.

Business suffers losses due to various reasons, not in their control. They should have a well-designed risk management plan and financial backup to thrive and grow from such losses. They cannot estimate and plan a profitable strategy and blindly believe in it ignoring the marker influences and fluctuations.