Start Up Business - Risk Management

 Risk Management is an efficient process through which risk can be minimized and suitable steps can be taken to reduce their negative impactsStartup Businesses begin at an inherently high risk when they are launched. They can sustain for long periods of time only if they generate profits and attract customers through their products and services. Proper strategic planning must be done to ensure the business will perform well.

Risk is a crucial factor that can suddenly affect business planning and cause challenges to its survival among competitors. Risk Management is an efficient process through which risk can be minimized and suitable steps can be taken to reduce their negative impacts.

Risk Analysis:

Risk Analysis is a fundamental process for a startup business through which potential risks are discovered. It requires thorough brainstorming on possible issues that may occur in the future due to certain actions. The initial step is to identify the type of risk with the help of different means. Manual approaches and automated tools can help in this matter. The second step is to assess and estimate the risk to determine its potential effect on business. It is extremely beneficial as it provides approximate value of risk occurrence and enables businesses to deal with these without bearing losses.

Risk Quadrants:

Identification of risks classifies them in four quadrants on the basis of two dimensions. Likelihood of Occurrence and Severity of Potential Consequences are dimensions while quadrants are determined on the basis of their intersection points.

Ignorable Risks are less likely to occur with minor consequences. Nuisance Risks are more likely to occur with minor consequences. Incurable Risks have a low occurrence rate with major consequences, while the Fourth Quadrant Risks are most likely to occur and inflict unbearable damages.

Risk Handling:

There are four major ways of dealing with possible future risks:

Risk Avoidance:

Certain risks can be avoided if the risk factor is high with less income generation. Startup businesses must weigh all factors when choosing a domain or starting a project. However, it is necessary to ensure that business is not losing out on a major opportunity due to fear of risk.

Risk Sharing:

A risk can be shared if there are no means of avoiding the occurrence of risk and when huge damages may be caused. Under such circumstances, risk is shared by insuring the business or establishing a partnership with a third party to share both profits and losses.

Risk Acceptance:

There may arise some situations where the costs of controlling risk will be too high or it will have no impact upon risk probability. Moreover, the losses could be covered up through another resource. When this happens, it is suitable to bear the loss without taking any major actions.

Risk Mitigation:

Risks can be controlled to inflict minimum harm by using Preventive Action or Detective Action. The former approach refers to prior actions such as relevant training to reduce effects, while the later approach attempts to quickly deal with problems once they occur.


The Risk Management process results in various benefits for businesses. It enhances the productivity of employees by providing them with necessary equipment and focusing on their well-being. The startup business will bear fewer losses with increased profit ratio.


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