The word 'crisis' when written in Chinese is composed of two characters; one represents danger and the other represents opportunity.
This is why the analysis of risk is important; by identifying the risks that may cause a business crisis, you are not only identifying the threats to our business but you identify opportunities.
There are many risks to a business both external and internal, over the coming months we will look at the areas of risk and how these may be mitigated.
Given the upcoming election, we thought we would start with Political Risk.
What is Political Risk?
Basically this is the risk that a change in the law will detrimentally impact your business. Recent real life examples are the introduction of the mining tax and the effect on the mining industry, the carbon tax and the plain packaging laws for cigarettes.
This is one of the hardest risks to minimise because it is external to your business and often beyond your control. Ways to minimise the risk are to be aware of the political landscape, keeping up to date via the media, talking to your local Politician and joining industry or business associations. For example if you have a large labour force a change in workplace relations or Super Guarantee levels could have a material impact on the cost of that labour force.
So keeping your ear to the ground and being aware of what each political party stands for, especially in areas that may affect your business is paramount.