The world is rapidly evolving and with it are the business strategies used by entrepreneurs. Business owners that embrace a fresh, comprehensive approach to risk management will benefit their companies—and their clients as well—in a market that has to adapt to new ways of operating.
The recent worldwide pandemic and geopolitical events have made it more clear than ever before that most businesses must prioritize adapting to a risk landscape that is rapidly evolving.
Entrepreneurs are simultaneously under more pressure than ever to compromise objectives from various stakeholders that have an impact on their businesses. Due to the convergence of these two developments, business owners must play both an offensive and defensive role in determining how their businesses will address risk.
The evidence suggests that businesses that set themselves apart from their rivals strategically have a higher priority for risk management and exhibit some similar characteristics.
They preserve their entrepreneurial spirit and make audacious decisions while effectively anticipating and managing risks as a major component of their consumer value proposition. These businesses are more transparent about their risk capacity and where to best use it, and they have stronger alignment when it comes to strategic trade-offs.
They also have a high-risk culture, and when shocks happen, they immediately pivot and decisively remake themselves. Entrepreneurs need to take charge due to the importance of several underlying decisions. They are better able to take advantage of modern risk management when they elevate their position as the top risk decision-makers and collaborate with business leaders.
Adam Aslam, who just earned his Managerial Finance Certification under Dr. Dirk Jenter at the London School of Economics and Political Science, was the subject of our conversation. Adam emphasized the need for businesses to fully embrace the dual nature of strategy. He believes an entrepreneur’s risk agenda needs to include these three major areas:
- Establish strong risk management capabilities for the organization that is appropriate for its size, complexity, and aspirations.
- Manage strategic trade-offs with a clear risk appetite to capture the upside while limiting the negative for the biggest risks.
- Encourage and set an example of a risk-aware culture that fosters innovation and a growth attitude while safeguarding the company.
Aged only 17, Adam is already successfully operating his own serviced accommodation business, and he believes as the world continues to transform, the risk agenda for businesses is ambiguous but also exciting as long as entrepreneurs continue to make risk management-informed financial decisions, their growth is inevitable. Are you using any of these strategies?