The Importance Of Risk Management

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According to ISO, risk can have consequences regarding economic performance and professional reputation, as well as environmental safety and societal outcome ([online] Iso.org 2009). Overall, risk can be a positive or negative accident because the risk is the possibility to suffer loss or gain. They have two dimensions, likelihood of occurrence and severity of the potential consequences (Akira Hirai 2009). Nevertheless, risks have a strong incidence on business. The review of the literature about the risks of failure is discussed in the next point (see further Chapter 2.4.3) 2.4.2 Risk management The art of risk management is to identify the risk unique to a project and to respond to that danger in an appropriate way. According to a study conducted…show more content…
This part focuses on models describing the key area of risks leading tech start-up to failure. Akira Hirai, CEO and founder of Cayenne-Consulting group, has developed a model of risks categorization, the “Risk Management Framework”. By knowing the severity and the likelihood, Hirai argues that it be possible to estimate if the “benefit of mitigating a risk outweigh the cost of doing so.” ([online] 2009). Risks are divided into four categories, ranked by an attempt to mitigate risks see Figure 12 Risks Management Framework by Akira…show more content…
Insurance can be subscribed to mitigate them. As the effects are significant, the price could go higher and become costly for start-ups with limited resources. The pattern can be included in this category to secure a technology vital for a tech start-up. 2.4.3.4 "Companies Killers" With a high likelihood and major consequences, they are disasters for every company, start-ups or Fortune 500. The research aims to identify them, understand their impact on tech start-up and research the most likely to lead to failure. They can be categorized into seven groups. • Market risks: Refer to the demand from the market for your product with the actual price (pricing policies). • Competitive risk: most of the company have more competitors than they usually think. Knowing them and knowing what a company does better than its competitors is key (Competitor value proposition and key resources). • Technology and operational risks: refers to advance in technology, the budget allocated to sustain technological improvements (technological resources). • Financial risks: For start-ups, it could be a disaster that investors refuse a new
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