If your financial problems have reached the point where you do not see a way out and you feel as though you are drowning in debt, your best way out is through declaring bankruptcy. Filing may well allow you to get your finances back on track Thankfully, there are now several web sites that are there to help people like you with bad credit to find the fast personal loans that you need. When you have bad credit, the first thing that you should be looking for is a loan company that
When we analyze how risk mitigation and risk tolerance effect business decisions, we are asking the decision-makers within the organization how much risk (or chance) they are willing to take versus the perceived rewards that could be obtained through a positive outcome of the decision being made. These are simple formulas and in a perfect scenario these two factors (risk mitigation and risk tolerance) would provide all of the information necessary to make major operational decisions. Unfortunately, like everything in life, it just isnt that simple.When assessing risk, it is extremely dangerous to use a simplified approach to decision making, because the fact is that risk must always be analyzed on an individual basis. While risk tolerance and risk mitigation are always factors in analyzing risk within the decision making process; other major factors also need to be considered; such as:
- The current position of the company i.e. if this is an investment decision management must assess the effects on internal capitalization if the investment ends up becoming a failure.
- The rewards of the decision Risk mitigation simply refers to minimizing the risks associated with the decision; and risk tolerance simply refers to the level of risk that the company is willing to deal with. Another major factor in the decision must be the value of the rewards if the final decision ends up being a positive one. As those rewards must justify the decision made by management it is necessary that they be positive enough to fully compensate the organization in a way that makes counterbalances the risk associated with the failure of the project.
- The motivation for the decision While a simple risk analysis may provide the same results for two types of decisions, the motivation for the decision is another factor that must be used in the decision making process. If for instance the decision is related to an acquisition of a competitor; the decision may be different if the competitor is a danger to your organization or if the competitor has a product that you believe has substantial long-term potential.
- The macro-economic climate While a risk formula utilizing only risk tolerance and risk mitigation doesnt take into account the overall economic health of both the organization and the market, as a decision maker YOU BETTER. It is much easier to recover from a poor investment or from a product failure during a positive economic climate than during a poor one. When things are going well from macro-economic standpoint bad decisions may cost money, when things are going bad poor decisions can cost everything.
- Contingency Options Back-Up plans are the difference between companies succeeding and failing. The ability of an organization to properly develop and implement contingency plans is a vital factor in any risk analysis. What are we going to do if this decision turns out to be a poor one? How will we recover? Can we recover? These are all questions that should be included in a proper contingency plan, and more importantly there should be answers for all of these questions. Without properly creating and implementing contingency planning into any risk analysis, the risk cant be fully known. The fact is that without this type of contingency planning the decision-makers are not being provided a full picture and making decisions while not being fully educated about the ENTIRE process is a good way to make a company-destroying decision.
- Resource Availability If, for instance, the decision being made is for a capital investment, an acquisition, or a new product line it is important to remember that even if the results are spectacular you may not receive the tangible benefits for years. While the investment may show a positive annual yield, the reality of the situation is that you will have to do without that capital for an extended period of time. For this reason it is necessary to not only confirm that you have suitable resources in the present, but that it is reasonable to project that you will have suitable resources during the course of the entire investment. Otherwise, even a good investment could have detrimental consequences.
- Projected Consequences of Failure The first question that should be asked when the opportunity is brought up is; What is the Consequence of Failure? This seems to be a basic ideal; obviously you should know the consequences of the actions that are about to be taken. However, in many instances decision-makers simply resign themselves to assessing the most obvious consequences, and since many of them are eternal optimists those consequences arent that troublesome. The fact is that when any risk analysis is performed it should include an in-depth disaster analysis. This analysis should focus on multiple scenarios by which this project could fail. For instance, instead of simply focusing on failure from a black and white perspective it is necessary to understand that there are multiple stages of both success and failure. While the current analysis may only assume the loss of the capital investment, it may also need to include factors such as lawsuits, debt loss, loss of key reserves, loss of human capital, etc. When many decisions are made at the organizational or operational level the potential success is examined on multiple layers, it is just as important to apply the same ideology to failure.
- Exit Analysis While most projects are originally analyzed with the assumption that choosing to engage in the project means that the organization will see it through to the end (whatever that end may be), in reality many projects end early for numerous reasons, such as:
- We decided to cut our losses
- We were provided an alternative exit (i.e. acquisition, buy-out, sell-off, etc.)
- We were able to mitigate risk by ending the project prior to full conclusion but were able to obtain a reasonable return.
- We found another more lucrative project to invest in.