Now that you know the importance of risk factors and contingency planning as covered in Sci0032, here are some of the important risks you should include in your business plan:
- Market Risk-This includes uncontrollable factors that can influence the market and the ability of the business to respond to the market. Such volatility in the market through changing value of investments and interest rates will require businesses to be dynamic and flexible so as to react to the changes and stay relevant.
- Execution Risk-This involves taking into account the margin of error when the team may be unable to carry out the business according to plan. Setbacks can take place in production, engaging customers or raising funds and this risk takes into account these potential shortcomings.
- Technology Risk- At times a company may default in creating the appropriate technology which may affect the business. Also, technology that was presumed to exist may not have been developed on time and businesses built upon the need for such technology may hit a roadblock.
- Environmental Risk – This refers to the macro factors such as the state of the economy, condition of industry and the competitive landscape. So, these are typically not within the control of the company. Here phenomena such as financial crises should be taken into consideration where the overall economy is crippled due to unprecedented problems.
- Regulatory Risks – This entails the environment determined by the governance of a country which influences operations and the way businesses are executed. So, overarching policies and frameworks need to be taken into account in evaluating the entrepreneurial environment.