Ways reduce external as well as internal business risk

Undoubtedly, every business always has some risk factor. Even a single error can become the cause of high risk. On the basis of different types of risk, experts are divided into two main parts. 

One is an internal risk, and the other is an external risk factor. It has been observed that both of them greatly impact the company’s performance and operational activity. Moreover, if the level of risk rises, then investors and stakeholders want to move their investment from that company’s fund. 

For this reason, being a company owner, one should always be careful about those risk factors. By any chance, if the investor moves the fund from the company, then it will level up the percentage of risk. In that case, the company will face a huge amount of loss. 

However, to compensate for the loss, a business organization can borrow 3000 pound business loans. But it is always better to avoid such risk factors. 

How to identify upcoming business risks? 

Before smashing the growth of the business, there are ample signs that come in front of every company. It will be foolery if a business analyst fails to identify those signs. While identifying upcoming risks can bring huge losses, on the other hand, taking precautions by observing those signs can reduce the problem. 

It is completely meaningless to think that a small scale business has no risk factors. Therefore, being an owner of a small business, if you think just like that, then it is time to change. Usually, small companies have a huge chance to face risk because of low potency. 

However, here are some signs that represent upcoming business risks. 

  • Low amount of profit 
  • Unable to clear inventory 
  • Loose ends in operations 
  • Unable to balance between income and expense 
  • Losing important data  
  • Minimum number of  consumers 
  • Reducing opportunity of sales 
  • An increasing amount of expense 
  • Unable to offer a desirable return to investors 
  • Shareholders lost interest in further investment 

So, all of these are signs of upcoming business risk. Although these are quite common incidents in day-to-day activity, if any of them run for a long time, it can become a point of concern. Apart from these, if a company fails to achieve goals repeatedly, it is also a hint of upcoming risk. 

Ways to reduce internal risks

  1. Evaluating operational activity once in a week 

By the term internal risk, it is not difficult to understand that most of the problems arise within the company. The workforce of the company is the most important resource. Be it operations or a sales job, 50% of the productivity varies based on their working ability. 

Most of the time, it has been observed that internal risk factors rise due to lack of concentration in work. For this reason, an employee should be monitored carefully. At least once a week, all his operational activities must undergo an evaluation. 

  1. Make sure the productivity is not a concern 

Most of the internal risk takes place due to not meeting productivity. When employees become idle, they hardly produce desirable productivity. Due to lack of productivity, a company easily face a huge loss. For this reason, being the company owner must assure that all his employees, be it salespersons or be it an analyst, are not wasting time. 

  1. The technical error should not take place 

You may have seen that large companies often circulate one common message, i.e. ‘due to maintenance, we cannot serve you for the next 24 hours. Well, this should happen in your company too. It is completely uncertain when and how technical error takes place.

Due to technical errors, a company may face some unforeseen variations. Therefore, buyers may face issues regarding payment. Moreover, manufacturing also can hamper. For this reason, a company must maintain the website so that there is no technical error. 

Ways to reduce external risks

  1. Take insurance to avoid financial loss 

External risks are those factors that come from outside. This type of risk is quite difficult to reduce because you do not have any control over it. For this reason, the company needs to stay prepare so that it can face the difficult situation firmly. 

Many companies purchase insurance coverage to compensate the loss due to external risk factors like fire, flood, burglary, theft of intellectual property, construction damage etc. Usually, the company which ensures its life can easily get monetary assistance. So, to reduce external risk, a company must take insurance.

  1. Adhere to the government policy 

Change in the political environment can affect the growth of a company. Whenever a new government comes to rule, there comes so many new rules and regulations. Business is one of the most crucial sectors, always comes under these changing rules. Government earns huge profits out of business. 

Without knowing changing rules, if your company continues to operate, then it may cost you highly. Therefore, being the owner of the company person should adhere to all the improvised government policies. It will save your company from facing a huge loss. 

  1. Be careful about the ups and downs of the market 

The market is volatile can change at any time. Besides, there is a threat of competitive products. So, you never know when and how the economic condition of the country becomes low. Despite being careful, you can hardly avoid the ups and downs of the market. 

However, if faced with such low economic conditions, apply for instalment loans for bad credit with no guarantor facility. In this way you can reduce economic crisis. 

Business risk is like an everyday companion which hardly one can avoid. However, if you follow these ways, then certainly you can reduce the risk factor. 


There are two types of risk in a business. One is external, and the other is internal. Both of them are easy to reduce if a business entity follows these ways.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button