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Risk in business


Any business faces risks at some time or another. Some may be easy to avoid or foresee, and thus measures can be taken to avoid or reduce them. Student Accountant (the ACCA’s student magazine) of June 16th last includes a feature on the recent volcanic ash cloud take caused chaos over European airspace on April this year. It might be something the airlines had not really thought about before now, but you can bet they now include disruption from volcanic ash in their assessment of business risk. The estimated losses from the disruption are in excess of $1bn – not exactly what the already recession hit airline sector needed.  Can all business risks be eliminated ?  Of course not, but businesses can try to minimise or reduce risks. As mentioned in the article,  a four point TARA model can be used to assess risk:

Transfer
Transfer the risk to another organisation such as an insurance company.
Accept
Sometimes this is the only option open with some risks that cannot be controlled, or are not cost-effective
to control.
Reduce
Less likely here (after all, it may be hard to do anything to stop the volcano erupting!) and so may not be relevant
in this case.
Avoid
For example, never let your key staff out of the country, or place business travel restrictions on senior decision
makers (at the very least put them all on separate flights – consider the recent Polish government air disaster).
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About martinjquinn

I am an accounting academic, accountant and author based near Dublin, Ireland.

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