Surname 2
Seemingly, every enterprise is vulnerable to some risks that include market, political,
competition, and exchange rate issues (Bromiley 269). Mostly, they revolve around strategic,
compliance, and operational lines. Strategic risk has much to do with the emergence of situations
that a business plan did not account when laying out its strategic business plan. Compliance risk
involves unanticipated or unplanned changes in the necessary laws and regulations that apply to
a business. Unexpected failure in the day to day activities translates to operational risk.
Apparently, business risks are both internal and external; the internal ones are specific to the self-
operations while the external context examines the world that the organization inhabits
(Sadgrove 23-24).
Depending on the type and magnitude of the risk, there are various risk management
techniques that an organization can apply in different situations. The entire process starts with
defining and measuring the risk (Bromiley 269-270). Risk avoidance is one of the most reliable
strategies; it involves putting effective countermeasures in place to ensure that the risk does not
occur. Separation is also reasonable; it considers keeping the most valuable assets in different
locations. Diversification is effective too. Diversification allows a business to deal with various
products or service lines. Other strategies include loss reduction and prevention which ensure
that the company accepts the probability of a risk but puts reliable mitigation measures to avoid
loss or minimize its impact. A perfect example is the presence of fire extinguishers in stores with
flammable substances.
Risk management in business is an essential input that every organization should
consider. Without it, it is somewhat challenging to explicitly define its objectives or lay out a
workable plan for the future. Furthermore, it enables sustenance in the long-term. As a result, it
