Risk Mitigation Strategies
When a company is considering expanding to international markets, there are numerous risks it might be exposed to. Some of the common risks that companies have to face in going global include containment, repatriations, hardships with foreign exchange, commodity pricing, interest rates and credit issues. In this regard, a company should consider having risk mitigation strategies to help reduce or eliminate the risks at hand. Risk mitigation can be defined coming up with solutions to handle adverse effects in business. This essay aims to analyze the best risk mitigation strategies that can be utilized in reducing and handling risks when going global.
Risk acceptance is one of the common risk mitigation approaches that can b employed when going digital. This is a strategy that is used when the risks cannot be avoided or limited for instance is if a company is moving to countries with certain legal and regulatory requirements, it must adhere to this policies and regulations. Such rules cannot be bent to favor the company. Thus the company will be obliged to adhere to them (Hopkin, 2017). The opposite of risk acceptance is risk avoidance. This comes as the other form of risk mitigation. If the company is not willing to accept the risks it can avoid them all together. For instance, if the company is not comfortable dealing with risks in a particular region it can as we avoid doing business in that region completely. It is the most expensive of all risk mitigation strategies (Hopkin, 2017).
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Risk mitigation is a strategy that involves taking some action in order to minimize the risks to a company. It is frequently used by companies especially when they are expanding to new regions. Ideally, it may involve accepting some risks and avoiding others but on an average scale. The last type of risk mitigation method is the risk transference. This might involve passing risks to a wiling third party (Hopkin, 2017). When a company is outsourcing operations, this would be a way of transferring risks.
References
Hopkin, P. (2017). Fundamentals of risk management: understanding, evaluating and implementing effective risk management . Kogan Page Publishers.
