Failure to do so could mean a disruption in your business activities and in a worst case scenario, a stop in your income generation capability.

What’s Risk Management?

It’s a means to control the uncertainty and unknown elements in your business (typically referring to the negative elements). This could range from dealing with the latest Google slap, having a website get hacked into, being at the receiving end of unethical business practices by service providers or even partners.

Let’s be realistic, it’s not possible to totally eliminate risk, but you can take a leaf out of Wikipedia’s stub on Risk Management and look at the 4 options:

• Risk Avoidance: actively avoiding all risk doesn’t do much for me, because the risk-reward maxim dictates that great reward is usually accompanied by greater risk. Go too far to avoid risk and you significantly reduce the potential returns from your business venture.
• Risk Transfer: typically done through insurance. In the tech arena, even if insurance was available, it’s likely to be prohibitively expensive. If anything, being able to outwit, outlast and out-innovate your competition might be a stronger solution.
• Risk Retention: Part of your market research process and due diligence should involve being ‘market aware’. Knowing your competitors and their web presence can help you better develop countermeasures and devise your business strategies accordingly. Operating in an information vacuum where you’re unaware of the business environment is a surefire recipe for disaster.
• Risk Reduction: This is probably the best solution provided you reduce your risk in an intelligent manner. Call it having a “Plan B”. A comprehensive strategy where you’re continually being proactive in your market space is going to provide better results than being reactive (ie seeing what others do then following or improving on what they’re doing). Diversification, building up multiple streams of income works, provided you have generated critical mass in your business. (critical mass = reaching a comfortable income target). Diversification if you’re only generating a couple of hundred bucks in a niche is silly, you should instead focus on achieving critical mass.

Overall, being “market aware” is probably the best solution for dealing with risk in your business.

And yes, I have activiated “Plan B” on more than one occasion.