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What is Risk Mitigation and its importance for Start up
Risk mitigation in normal term mean how are you going to avoid the risk that you have seen or you feel it can be hindrance to your success.
So where does this risk mitigation come from, it originates from your investment sheet all the components that go into fixed aspect are the ones which lead to risk mitigation. So what is fixed aspect in investment sheet. It’s the amount spent which will not appreciate but helps in increasing return on expenditure or it aides revenues for e.g amount spent on developing product or amount spent on purchasing raw materials.
The reason why fixed aspect is for e.g you invested time and money in developing application but when launched it didn’t get the desired response and didn’t create desired revenues. So the time and money spent is lost, but on the other hand if it was taken care understanding few aspects like likeability,user friendly it would have generated revenues.
So this is where the risk factor starts so as you clearly see the risk factors then next question is how to ensure that you take care of them which can turn tables on you and carry on to ensure it gives you revenues.
That is where risk mitigation comes into picture, the areas which are grey need to analysed with realties and not on gut feeling, like if you want to do a survey before you launch product then it should be done with utmost importance and it just cant be like I know this product will do wonders which is your gut feeling not knowing how market will react to it.
It can also be raw materials or inventory just by stocking it will not ensure it will be used one day, but the amount blocked by it can also lead to bleeding of your company, so that’s where forecasting comes into picture.
So risk mitigation is a process of identifying factors that effect your company and how well you can ensure that it can be avoided is all about Risk mitigation.