Calculated Risk Mangement for a Successful Startup

What is Risk Management?

It is basically taking risks for your startup in a controlled environment. So, when you take the risk you have got a backup plan to cover fire in case you run out of ammunition in the war zone (market). This is known as Risk Management in the world of startups. I will provide a brilliant example.

A person just started a small business of mobile accessories online. He knows there is enough market out there already that he needs to compete with to outreach his customers. So, before getting into the game he needs to understand that his product is unique and cheap at the very same time. Now, if the product is cheap; how can it be unique. For this particular purpose he needs to visit whole sale markets. When he finds what he needs, next step is placing a bulk order. Now, when he is selling his item online; he will get customers sooner or later. But, what matters is he took a risk placing a bulk order; at the same time he did research for uniqueness and price control. This is what exactly known as Risk Management in the world of startups.

Any start up in this world fails only when it runs out of a credit line. So, it’s completely clear that money is the lifeline of your startup. What needs your attention is Risk Management to check on the expenditure? How can you do that?

1) STOP SPENDING STUPIDLY:- You are not here to impress your girlfriend on a date. Don’t be a show off no one needs to know your spending capacity. Your clients are only seeking some brilliant product packaged with good services. They are not here to see your costly machineries, your heavily salaried employees and your mind blowing infrastructure. This is a big NO. It’s the beginning phase; focus only on good products, good services and amazing marketing. That’s all you need.

2) Don’t run with a blindfold on your eyes:- Another stupid reason for a startup failure is when you keep spending in the wrong product or services without seeking the market survey report. Why? You could lose a big fortune of money that’s why. Your customers are looking for something else and you are not ready to see that with your open eyes instead you choose to cover your eyes like a horse and run straight. Look around understand your market don’t get intimidated by a product or a service you like. Understand what the market needs, the customer’s demands and work accordingly.

I am not saying don’t take a risk. I am just saying don’t take one without a plan.

The Consequences of Inadequate Due Diligence

Operating a global business today requires efficiently managing a network of third-party partners that supply product components, run operations in foreign markets, operate call centers, or act as outside consultants or agents.

The vast array of capabilities and specialized skill sets of a well-maintained third-party network makes operations easier for both the organization and its customers. But many organizations, from small businesses to multi-national corporations, can rarely afford the time and effort required in-house to manage these often complex third-party relationships.

Because of this, the risk of unethical business practices, bribery and other business corruption potentially increases if inadequate due diligence is conducted on third-party partners. The ramifications of a scandal related to a third-party partner can easily take down an organization, resulting in such risks as a damaged reputation and brand devaluation, to regulatory violations, legal proceedings and possible fines and jail terms for directors. The only way to fully protect the corporation’s assets, therefore, is through a strong and viable third-party risk management program.

Building a third-party risk management program is not a passive process. It requires time and effort on a continual basis, as the risks associated with third-party partnerships constantly evolve.

Consider the events of this past summer, during which the legislators of three separate nations signed new compliance regulations and standards into law. Without a doubt, if your organization’s third-party risk management program is unable to quickly adjust to these new regulations (or is not designed to anticipate future legislative movements) your organization is truly at risk.

Cutting corners: not worth the risk

Still, far too many organizations are willing to tempt fate by cutting corners on development and implementation of their third-party risk management program. Certainly, building a strong risk management program requires a significant investment of time and resources (both internally and from the outside), but the consequences of not doing it right could be dramatically severe.

One way organizations attempt to cut corners is by relying on outdated or stagnant tools to monitor, detect and prevent risks. Almost always, hiring outside industry professionals with proven track records of successful due diligence experience is necessary.

Relying too heavily on “desktop” due diligence is another dangerous shortcut. Desktop due diligence is an important initial step of the investigative process, involving background checks, lien searches, regulatory filing investigations and environmental reports. And while it is a vital component of any effective due diligence program, it’s not nearly enough to thoroughly evaluate a third-party.

Truly understanding a potential partner’s business requires a considerable amount of time spent face-to-face with the outside organization’s leadership, operations management and even current customers. This “boots on the ground” process will detect potential risks which are often hidden from a distance, and undetectable via web-based discovery tools.

The “boots on the ground” approach also helps to establish a relational dynamic required for ongoing negotiations and provides clear insight into two of the fastest-growing issues in third-party risk management: bribery and labor management.

Bribery as a compliance issue

Anti-bribery and anti-corruption compliance is a fast-moving target. New anti-bribery laws and regulations are being decreed around the world at a relentless pace. Complicating matters further, many countries may have laws in place but lack the ability to adequately enforce them. When this is the case, the responsibility falls to your organization’s due diligence program to ensure detection and protection.

High profile investigations in recent years have contributed to the rapid emergence of bribery and corruption as a societal issue. Never before has such a contrast been drawn so dramatically on a global stage between those that engage in bribery and those that suffer as a result. Any organization that finds itself mixed up in a scandal involving bribery has more than a legal mess to contend with. It has a long battle to win back the trust of its shareholders, employees, customers and the public.

Conducting sufficient due diligence surrounded by such varying factors is work that must be conducted in person. Gaining insight into a potential partner’s company culture requires a level of immersion with the organization’s leadership, management and staff. When it comes to evaluating bribery risk, some warning signs can only be discovered on-site.

Labor matters and compliance

From overtime issues and under-age workers, to unsafe working conditions and improperly documented accidents, labor compliance represents a major component of any strong third-party risk management program.

Once again, inadequate attention to risks related to labor compliance can bring on considerable penalties. Understanding which industries, geographic regions and management structures elevate the organization’s risk is key to efficiently operating an effective due diligence program. This understanding is nearly impossible to guarantee via ‘desktop’ due diligence. Spending the necessary time in person is the only way to be sure a potential supplier is properly compensating and managing employees while providing a safe workplace environment.

Make no mistake, even if your agreement with a third-party partner places the responsibility of payroll issues firmly upon the vendor, your organization — as a joint employer — can still be held accountable in many countries. After all, the labor being conducted at your partner’s facility benefits your organization’s bottom line.

Best practices

The demands of identifying and measuring third-party risk, monitoring those potential risks on an ongoing basis, and making recommendations based on empirical research is best met by a dedicated team of outside professionals. And while no two organizations are alike in terms of risk profiles, several factors have become consistent in building a strong and effective due diligence program:

Planning. Without a well thought out plan outlining ongoing monitoring efforts with assigned roles and responsibilities, efforts to mitigate risk will be haphazard at best, and dormant at worst. With a thoroughly established, management-advocated program that identifies specific risk factors for each affiliation, a process for addressing red flags, and an established mechanism for continual revision, the organization will remain vigilant in its efforts to protect itself from liability.

Documentation. Due diligence efforts are only as good as the information and data gathered and secured. Meticulous documentation and reporting enables the organization to recognize trends, communicate analyses, and sustain efforts during any future personnel changes. Effective risk management programs feature established guidelines for capturing data, contracts and research with uniformity.

Culture. An organization where leadership, management and workforce do not take third-party risk seriously will never be adequately protected from risk. Successful organizations in this respect dedicate themselves to building a culture in which every employee feels personally invested in the risk management of the operation. Employees must feel empowered and encouraged to report red flags. Passive engagement is simply not enough.

Done correctly, third-party risk management can effectively save the organization from risk, liability and other perils often associated with outside entities wanting to engage and transact with your business.

Planning to Launch Your App? 3 Vital Things to Know Before Proceeding

Well, while releasing a new app in the App Store does not come with the guarantee that it would gain immense success! How vying today’s app market is beyond any doubt. To stand out in this crowd, you need to come up with an interesting and creative app idea with rich and effective features along with business-driven app marketing strategies. Here is a list of a few crucial things to contemplate before launching an app to the App Store that would make the path to success smoother.

#1 Know the Market and Competition

Well, believe it or not, this point has a huge impact!

Until and unless you know the market well, where you are going to launch the app, how is it possible to know what the market demands! Moreover, you should do in-depth market research on your competitors. You need to research on what services your competitors are offering, how the users are reacting to those services. Thus, you need to find the loopholes and come up with an innovative solution that can efficiently resolve the issues customers are facing. A proper market research would help you to set well-defined aims for your business and to set an impactful strategy.

#2 Set Strategic Approach to Pricing

Deciding on the app pricing model is very crucial! See, if your aim is to release such an application on the App Store that would reach a huge market base, going with the freemium pricing model is the best choice for you. Otherwise, if your aim is to give solution to any particular issue to a niche audience, subscription or the paid pricing model can work the best. However, depending on the purpose that your app is going to serve, you need to choose the best option. Before setting a price for your app, you need to dig for answers to the following questions.

  • What are the charges of your competitive apps?
  • How much money you would need to keep running your application
  • What extra features you should offer if a user decides on in-app purchases?

#3 Optimising the Application for App Store Search

Launching the application in the App Store is not the end of your task. You need to optimise the application properly so that the ranking does not get affected. According to the experts, below-mentioned are some of the major aspects that have great impacts on the ranking of an app.

  • Branding and visuals used in the app
  • Use of the keyword in the app description and/or name
  • Total number of the positive reviews generated by the app
  • Total number of app downloads

According to a recently made research on the app ranking tactics, the right placement of the keyword in the app title can boost the ranking by almost 10.3% in the App Store.

Apart from all the above-mentioned aspects, you need to contemplate other points such as devising and designing branded screenshots along with designing intriguing visuals to serve the marketing purposes. Moreover, you need to pay a special attention to get trusted and honest testimonials. This would help the people to get the value of using your app.

Fleet Risk Management FAQ

Managing any business is tough, but when your employees are out on the road? Well, it only gets more complicated. The risk associated with managing a fleet is real and significant as mistakes can not only end up in damage to your property but, more seriously, a threat to life.

Most people know that if you’re operating a fleet of vehicles you need to partake in fleet risk management, but that leaves many questions unanswered. In this guide, we’ll take on the most commonly asked questions regarding fleet risk management. Let’s get started:

Q: How often should my drivers be tested?

A: Bad driving habits don’t take long to form, and even habits which have been taught out can creep back into our driving style if we aren’t careful. It’s a consequence of idle habit, and it means that testing your drivers regularly is utterly essential.

In general, it’s recommended that major training is undertaken on an annual basis, however, quarterly mini-assessments are also recommended in order to correct minor issues with driver style.

Q: My staff drive vehicles which aren’t cars, do I still need fleet risk management?

A: It doesn’t matter what type of vehicle your staff are in control of, whether it’s bicycles, motorbikes, buses, trucks or lorries, fleet risk management is a legal and moral obligation. Most fleet risk management firms will offer support for the wide variety of vehicles which are owned and operated by businesses like yours.

Q: Who in the company is responsible for fleet risk management?

A: Unlike certain legal obligations, there isn’t a set position within a business which is responsible for FLR. However, it is recommended that the role is taken upon by those at the very top of the business as this sets an important precedence for road safety within the business.

Ultimately, should your business not enact a fleet risk management program, your business will be held personally responsible for any accidents that occur. Thus, it’s recommended that FLR is taken seriously at the top of the business and, ideally, an individual is given the responsibility of overseeing it throughout the year.

Q: What kind of data can you get from a telematics device?

A: An optional aspect of FLR which some businesses choose to install are telematics devices. These boxes are effectively cousins of flight ‘black box’ technology and monitor everything that goes on in the car.

These devices can provide information on speeding, dramatic acceleration or braking, cornering performance and other, vital, risk management issues.