Running a successful business is not easy. Everything from meeting contractual obligations, to creating a suitable work environment allows for certain risks and exposures, which is why risk management for Connecticut businesses is so important. Risk is everywhere, and success in business often comes down to recognizing and managing the risks associated with potential opportunities and returns.

Identify and assess risks by analyzing situations

The types of risks most businesses face are quite varied. Risks typically include both financial and physical categories. Types of risk include apparent hazards, such as safety and health risks associated with operations, as well as financial risks from exposures to market price volatility, counter party credit defaults, and also legal liabilities. While some risks are obvious, many are not. Depending on the type of company being operated, risk categories may include operational,strategic, reputational, market,credit,regulatory, and political,as well as legal,event, andmodelrisks. So the first step is to identify possible risks throughout the business.

Risks are often interrelated

Interactions andcorrelationsof risks are a key element for identifying, quantifying and mitigating risks. For example, exposure tocredit risksmay also affect market price risks, whereasoperational risks,such as fraud, may create legal and reputational risks. Recognition that risks interact between business activities is the basis for the enterprise-wide approach now widely practiced by many leading companies.

Many risks arise from exposure. Reduce those exposures and it is likely to reduce the risk. The selected approach and structure of business activitiescan have a significant effect on the exposure & risk levels being generated. Certain types of agreements andtransactions may result in transference or acceptance of risks with a counter party. Risk awareness, particularly in business processes and commercial activities, can lead to opportunities to reduce current and futureexposures.

Continually reassess risks

In business things often change and so does the potential for risks. Market conditions andvolatilitylevels change, financial strength of counter parties change, physical environments change, just to name a few. And these changes may be rather sudden, or they may take place over a long period of time. Exposures to risks that result from business activities may also change. Connecticut risk management requires that one reevaluate risks on an ongoing basis, and having an effective corporate risk management framework to assess both current and projected risk exposures is essential. Forecasting future exposures is necessary since many business decisions are based on projected risk levels.