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Why you should not ignore risk assessment

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Considering the hardships the world is going through, recently paralyzed by one of the biggest pandemics in history which, claimed the lives of millions of people millions of companies that could not bear the burden of shutdowns and were not prepared for working remotely, it has become necessary to draw attention to something that many companies despise: the habit of performing risk assessments.

Obviously, depending on the market sector, risk assessments will point to different hazards or threats; even within the same sector, such threats can differ significantly.

For starters, there is the need to distinguish the concepts of hazard and risk:

Hazard Anything that can cause damage, including theft, explosions, work accidents, power outages, toxic chemicals, floods, machine breakdowns, conflicts between employees, lack of raw materials, etc.
Risk The chance of a hazard causing damage.

Considering these two concepts, it's easier to understand that , different hazards are identified in a risk assessment process so as to    calculate the probability of damage which they may cause thereon – i.e., the potential risks that the company may face.

When carrying out a well-done risk assessment, one can expect to find:

1. Risk identification and classification

2. Determining how damage can be caused

3. Establish a plan of preventive or reparation measures, should the risks be unavoidable

4. Consistent communication with the entire company regarding the identified risks

5. Effective implementation of such measures

6. Constant review of risk assessment, considering changes in the scenario against which the assessment is made

7. Creating a report of risks identified in the course of the company's existence

On the other hand, a very common mistake in transnational companies is not considering local scenarios, whether from a legal, economic, or social perspective, trying to standardize risks identified in branches abroad. Such distortions severely compromise the credibility of risk assessments, as the results are shaped similarly to assessments carried out in other countries, completely disregarding local scenarios, which can make the risk non-existent or highly relevant.

Any entrepreneur with a business vision knows that their survival and success relies on the intended business strategy and their acumen in facing adversities when developing their business. Thus, risk assessment becomes essential for the enactment of preventive measures that can greatly mitigate significant risks to the business.

Those who ignore risks have a huge tendency to yield before their competition. After all, remedying a risk is much more difficult and costly than preventing it whenever possible.

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