A risk management consultant helps businesses not only identify potential risks they may face, but provide solutions to help minimize loss and risk completely.
What Does a Risk Management Consultant Do?
As a business owner, you’re likely well aware there are inherent risks in operating and owning a business. Today, businesses face risk in a variety of ways. And some risks are more impactful than others.
From risks to profitability and operations, a risk management consultant helps a business navigate the complexities of the risks that exist today and continue to grow. Specifically, risk management consultants help businesses lower their exposure to five important types of risk.
The 5 Types of Risk Businesses Face
Businesses are exposed to five different kinds of risk that can have long-lasting impacts on their stability and growth.
1. Financial Risk
Financial risks involve areas like shareholders, budget planning, cash flow, as well as debt management. Changes in the market can threaten a business’ financial standing further.
Financial risk can include:
- Currency risk: If a business has international clients, it faces risk when foreign currency suddenly depreciates.
- Default risk: Not planning properly for a business loan can quickly put a business at risk of defaulting if its unable to pay the loan’s interest rates.
- Liquidity risk: If a company can’t convert assets into cash efficiently, it can face liquidity risk.
2. Compliance Risk
Compliance risk is possible when a business fails to adhere to local laws and regulations, or internal standards. This could involve things such as data protection or proper manufacturing of products. Compliance risks can damage a company’s reputation and require them to pay expensive fines.
3. Operational Risk
Operational risks involve the day-to-day activities of a business that create a threat to its profits. Employee errors, natural disasters that damage assets, or external fraud could all be considered operational risks.
4. Strategic Risk
A faulty business strategy is just as risky to a business as not having a business strategy at all. If a business isn’t set up to grow or reach its quarterly goals, over time, a business can see a dramatic decline in its profits and may lose its place in the market to a competitor.
5. Reputational Risk
Reputation is everything for a business. Reputational risks have to do with how a business manages negative customer reviews or navigates PR issues.
Benefits of Working with a Risk Management Consultant
With so much risk existing in today’s market, businesses can exponentially benefit from working with a risk management consultant.
Identify Risks
First and foremost, risk management consultants can help you uncover risks that you may not be aware of. While some risks are obvious, like slip-and-fall risks for restaurants or retail stores, other risks like supply chain issues may be more difficult to predict.
A risk management consultant aims to proactively identify all risks a business may encounter so that a business can take steps to lower that risk.
Assess Probability
Understanding what risks are possible is one thing. Actually knowing the likelihood of that risk occurring is another. Risk management consultants can help determine what the probability of each risk might be so that a business can prioritize more relevant risks over less relevant ones.
Create a Plan of Action
Of course, a risk management consultant helps a business by putting together a customized plan of action that mitigates the impact of a risk, and helps lower the chance of that risk taking place.
VillaNOVA: Risk Management Consultants for All Businesses
Not sure what risks your business may be exposed to? VillaNOVA offers risk management consulting services for businesses in all industries.
Don’t wait until a risk has already occurred. Get in touch with VillaNOVA today to start protecting your business.