risk management is defined as management of risk in order to minimize the impact of risk in a short period of time. There are many categories of experts of risk management according to their area of specialization. Risk management always involves the process of identification, measurement and prioritization of risks. After this all, the available resources are utilized to observe, minimize and control the affect of the disaster. Several risk management standards have been developed, which are helpful in the management of risks.

Deciding how much risk your company can accept is a major part of the management strategy. If your business is buying and selling stocks, you know you must accept a certain amount of risk in order to maximize your gains. How much risk becomes a company decision. It should be clear to everyone involved.

In September 2010, Wolters Kluwer Financial Services obtained FRSGlobal to provide detailed conformity and danger control answers that cover functional risk, compliance danger, as well as financial hazard as well as reporting â meeting the major danger requirements of financial organizations worldwide.

He said preventive market intelligence identifies external factors that may allow risks to enter the organisation and enables pre-emptive action. As a result, he said the return on investment is significant, but the irony is that when market intelligence is conducted well, the results are very often not perceived because risks would have been eliminated and become unperceived risks.

Before starting out on any venture, all types of potential risks that can occur and tune into a reality are identified. Lets consider a simple example; if you go to cross a street, you expose yourself to the risk of being hit by a speeding car. If its a crowded street with lots of traffic, the probability of this happening becomes even higher.

Cash management and liquidity:

Business liquidity is directly related to cash management that includes budgeting, forecasting, ROI, cash collection & allocation, and the likes. Poor cash management can hurt business liquidity in many ways. Finance managers must consider liquidity risk every time they are looking to invest the capital in any venture; also they need to monitor cash flow closely.

Account Payable & Receivables:

When youve got lots of sale and purchase going on credit basis, you need to keep an eye on your account receivable, as well as account payable. The idea is to try and collect payments as soon as possible, while trying to delay payments which are due (while staying in ethical limits and not bullying your creditors). Encourage customers to pay in cash, remember cash is the king, even more so in times of recession.

Dont stack useless assets:

Some businesses make the mistake of piling up assets that are not really useful at that particular time. These assets can be some seldom-used vehicles, vacant land, useless furniture, inventory or machinery that they dont need at the moment. Sometimes renting or outsourcing can do the job, therefore you dont really need to purchase all sorts of equipment every time the slightest need arises.

Choose the right investment:

When the company holds cash that exceeds its present expenditures, the excessive amount must be invested instead of holding (because of opportunity cost). However, the people responsible for choosing investment options must keep the liquidity factor in mind. Try to avoid investments that lack in liquidity, and keep an eye on future expenses as well.

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