Business risk: what it is and how to recognize it in your company

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A business risk is an event that can affect a company's results and cause losses. This danger is not always obvious, so being prepared to identify, analyze and resolve business risks can save your company from many setbacks, including its closure, for example.



Business risks can vary from company to company, and in this article, we’ve listed the main ones. Read on!





What are the types of business risks?


Business risks are classified into two types: instagram database risk – which involves dangers related to the economic system and the market in which your company operates -; and non-systemic risk – which is an internal danger, intrinsic to the organization.



According to their nature, business risks are divided and classified into seven categories. Read about each of them below.





1. Market risks


Exchange rates, changes in international policies and global economic crises are market risks that can affect small and medium-sized companies. This business risk can be minimized by monitoring market influences and identifying threats.





2. Reputational risks


Once the reputation of small and medium-sized businesses is damaged, customers can migrate to competitors and leave your business on the brink of bankruptcy. Maintaining the reputation of your small or medium-sized business involves preventing your organization or its managers and employees from being involved in fraud or corruption schemes. A company is also not well-regarded in the market when customer data is leaked, which makes its consumers susceptible to identity fraud.





3. Credit risks


Default is the main credit risk. Defaulting customers have a major impact on the financial health of a business. Failure to receive payment for a product sold or service rendered results in losses and impacts an organization's cash flow. Therefore, defining the risk of default can help reduce the chances of your business entering into partnerships with consumers who do not pay their debts on time.





4. Risks in operations


These risks occur when an operational problem affects the company's results, such as problems with machines and systems or lack of personnel, for example. Operational risk can be reduced by adopting management review mechanisms and creating job and salary plans, with defined roles and responsibilities.