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Risk Management – An Emerging Field in Business That Is Essential For an Optimized Working of the Day-to-Day Operations

In the olden days, need for managing risks was not that evident nor needed by businesspersons due to transparency in trading and operations, as well as people working with true devotion and loyalty to the business. Now, however the situation has changed greatly and people do not trust their friends, let alone work colleagues. A place where money is involved is bound to flood with potential risks although the field of risk management does not only relate to keeping track and records of business transactions to figure out any potential abnormalities. It has more to it.

Risk management focuses on identification, analysis and prioritization of the several day-to-day risks that are involved in operating a business. It is due to the uncertainty involved in every business activity that introduces the scope of risk management. This is followed by application of appropriate resources to monitor, minimize and control the impact or probability of unfortunate events. Risks can come from all directions in business including:

  • Financial Markets
  • Project Failures
  • Launching of New Products or Services
  • Legal Liabilities
  • Accidents
  • Credit Risks
  • Attack from a Rival
  • Natural Disasters and Causes
  • Labor Unions
  • Strikes
  • Safety Measures at Workplace
  • Employee Harassment & Legal Consequences
  • Etc.

The worldwide established, ISO standards are a major guideline of how to assess and mitigate risk. As explained above, although the majority of risks in a business are a result of project uncertainties involving a huge amount of money, the other factors like inefficiencies in operations, safe working environment also contribute to risks. Each time a risk is assessed in a business, a team of individuals who particularly specialize in risk management or have the ability to solve problems relating to different areas of business, should sit together and formulate strategies. It is based on the strategies that they should carry out their course of work in order to control risks and minimize its future occurrence.

The kinds of problems that can arise in each risk group include:

  • Bad Investment Choices
  • Poor Financial Calculations
  • Excessive Spending
  • Accounting Fraud
  • A Change in Government Policies
  • Demographic Movements
  • Technological Evolution
  • Defective/Obsolete Materials & Goods
  • Duplicitous Employees
  • Labor Drain
  • Legal Infringements
  • Civil Unrest
  • Political Corruption
  • Unfavorable Ideologies
  • Poor Management Decisions
  • Corporate Governance Issues
  • A Change in Customer’s Behaviors
  • Leadership Issues
  • Inefficient Marketing Campaigns
  • Etc.

Every business should have a risk management department so that the problems they face are controlled on a day-to-day basis and are not piled up, which would lead to greater, uncontrollable risks in the future. Small businesses do not have that extra cash lying around to employ a risk manager that would optimize business functions nor do they need one but for a flourishing business, it would not hurt to smoothen the barriers so that greater work efficiency can be achieved. For this purpose, businesses often hire services offered by business analytic companies. These companies help by:

  • Analyzing Big Data
  • Providing Customer Analytics
  • Risk Management
  • Reducing Fraud
  • Boosting Operations

SK Financial in Tampa is here to help businesses understand the importance of risk management and how it optimizes business functions.

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