How to reduce risks to a minimum



In this fiercely competitive market, risks are inevitable. Any business that does not dare to take risks will not grow. It is a fact that the greater the success, the greater the risk.

People who take the initiative to take risks are capable, very sensitive and have a reasonable way to deal with risks. They use the method of risk, in danger there is stability. Or before taking action, they always leave a way out for themselves, advancing can attack, retreating can defend, always be on guard against failure. That is the inevitable way to reduce losses. People can completely reduce risks to the lowest level or avoid all risks. That is also the truth. Of course, the smallest level is controlled by the risk itself, not by people's thinking of it as much or little.

1. You can't put all your eggs in one basket.

This saying is most practical for the people, it is also the most basic form of risk diversification. But successful ventures naturally have corresponding profits. However, once failed, everything is lost. When investing in stocks, the most important thing is to pay attention to the essential investment combination, choose a number of risks to the lowest level.

Risk dispersion is a very widely applied principle. Small things like freight transport, warehouse management, big things like business strategy, corporate strategy can be applied very flexibly. For example, transporting goods to the location. That way, even if a certain means of transport has a problem, it cannot affect the whole situation. In warehouse management, there was a memorable lesson: a few years ago, a fire broke out at Long Phuc department store in Beijing, because the warehouse there was not designed scientifically and reasonably, and did not take into account the possible risks, but only thought of thoroughly exploiting the space to reduce costs, storing goods in an old house. Among them were valuable electronics, so just one spark burned everything down, causing huge losses.

One business method is to establish joint-stock enterprises, concentrate capital from many individuals, groups and different economic organizations and use it to expand the scale of the enterprise, promote the development of the enterprise. This method of risk dispersion is applied relatively widely by businesses, it is much safer than borrowing capital with mortgages from banks. The risk of capital has actually been dispersed to all co-investors. Thus, businesses can be more bold and more daring to participate in competition. Investors do not easily focus on one place but often use two methods to disperse those risks. They either look for a unit to invest with in a business to use to shoulder the risks. Many times they invest in many businesses at the same time to minimize risks and achieve the highest efficiency.

“Don’t put all your eggs in one basket” is the most effective risk management method. It will play an important role in a wide range of fields, making people feel less dangerous. But we also need to pay attention not to be too scattered, how to get the biggest profit from the capital we put in”

2. Find a “grasshopper” to share the risk.

What is a “grasshopper”? There is a Chinese proverb: A grasshopper clinging to a rope is hard to untangle. In fact, this is one of the ways to reduce risks, cleverly choose allies, pull them into business with you, turn them into “a grasshopper clinging to the same rope”, and share the risks. For example, many companies join together to form a group, jointly shouldering all risks, expanding their scale, constantly attracting subsidiaries and small companies to cooperate, not only adding new vitality to the group, but also making it possible for other small companies to make up for the losses when problems arise.

In competition, finding a partner can not only increase one's strength, but also reduce the pressure of risk, its effect is too obvious.

3. Of the thirty-six strategies, running away is the best strategy.

If you understand your own strength and realize that you cannot bear the risks ahead, you must quickly eliminate situations that may cause danger, or avoid paths that may cause you losses and open another path. That is also a way to reduce risks.

That year, Li Xiaohua went to Guangdong to attend an exhibition and discovered a very new automatic beverage vending machine that China had not yet produced. So he tried every way to convince people to buy the machine for 3,800 yuan and brought it back to Beijing. That summer, he brought the machine to the Beidaihe coastal area to sell beverages. This was the first time this type of machine had appeared here, so many customers came to buy it. But at the end of that summer, he sold the machine because he thought that this year he was the only one doing business like this and making a big profit, there would definitely be people salivating and next summer there would be many people competing to make it. So the risk would be very high, the profit would not be worth much. Li Xianhua was very smart and sold the machine for a very high price. The following summer, there were many machines like this. The fierce competition forced people to lower prices, and it was lucky not to lose money.

Lee Hsien-hwa's brave retreat avoided risks, it is true that "taking one step back to advance three steps". It is true that "36 strategies, running away is the best strategy". This is worthy for all businessmen to learn and choose, but if they continue to be stubborn, lacking in alertness, they will certainly perish.

4. Find a “scapegoat” to transfer the risk to others.

We often hear about important foreign figures who, in order to avoid assassination, often look for people who look like themselves to act as substitutes in unnecessary situations, allowing these people to appear. If there is an unfortunate risk, they will have to bear it. Here, the fake politicians have become "scapegoats" for the real politicians, becoming substitutes to bear all the risks.

There are many such cases in the business world. To reduce the risk, it is possible to find a replacement to transfer the risk to them. If the risk is successful, of course the profit belongs to you. But once it fails, all the responsibility and consequences will be borne by the replacement.

Another example, before the decisive battle for control of the shares of the Kowloon Warehouse in Hong Kong with several foreign corporations, Bao Yugang bought 30 million shares of Kowloon and then immediately transferred them to Longfeng International Investment Company. This made the people of all circles here unable to understand, competing to guess about the purchase of Longfeng shares. In fact, Longfeng is a company controlled by the Bao family group. Bao Yugang used this trick to find a "scapegoat" to transfer the risk to someone else. Because once this purchase failed, the Bao Yugang group would lose several billion Hong Kong dollars, pay a very high price, and could even go bankrupt. However, once the economic and legal responsibility was transferred to Longfeng, a subordinate company of his, and this company took responsibility, the huge benefits that could be obtained in this case were completely worth the risk. But with his talent and wisdom, along with his daring to take risks, Bao Yugang finally succeeded. He took control of Cuu Long. This example has one characteristic: the “scapegoat” is actually a subordinate of the big boss. That is what is called “The wool still grows on the sheep”.

Another way to find a “scapegoat” is to come from the intentions of other companies. For example, if you want to conduct a business or investment activity with a relatively high risk, you can completely divide that activity into small steps. But in that, the steps with the highest risk are divided for those who can take on the responsibility in other companies, while you just “sit on the mountain and watch the tigers fight” and wait for the benefits. This is even easier for companies that want to quickly get business deals to control, turning them into “scapegoats” without knowing it.

Transferring risk to others can avoid huge losses if failure occurs, without worrying about the consequences. Failure is passed on to the successful “scapegoat” and all the benefits are reaped. That is the trump card in the way to get rich.

5. Spend a small amount of money on insurance to keep the peace.

This trick is known to everyone and is widely applied. Through insurance companies to insure against risks that cannot be reduced in reality. But through the compensation that the insurance company pays back, it can compensate for part or even all of the damage. In fact, isn't that a guarantee of one's own interests?

The previous section gave an example of the fire in Long Phuc - Beijing, where many valuable and expensive goods were burned. Fortunately, this unit had purchased insurance. The insurance company sent someone to investigate and clarify, before determining the loss, the insurance company paid Long Phuc 10 million VND in advance to restore the business. This amount of money was a very timely amount for Long Phuc to solve the immediate difficulties. In fact, purchasing insurance is also a common and normal thing, but some people do not want to do so.

Therefore, for those who often take risks, insurance is very effective, especially for social service professions. For example, maritime transport, road transport, oil exploitation, and supply industry, the risk ratio is high, so it is necessary to pay attention to buying insurance.

Of course, buying insurance costs money, so if we buy all kinds of insurance to be 100% safe, certainly no business can do it and if so, it will greatly affect the business's operations. Therefore, we should only choose to buy insurance to ensure our investment items.

6. The ultimate protection: Bankruptcy protection.

The above five measures, once implemented, do not necessarily guarantee that businesses can overcome difficult obstacles smoothly. They are just some protective measures, and any protection is only effective within a certain scope and level, and is not a magical panacea that can cure all diseases. Even the “last resort” measure is only a last resort, and even businesses that are in difficulty do not necessarily have to apply this method immediately. “Last resort” refers to the Bankruptcy Protection measure. Computer Company Bankruptcy Protection. The once famous Wang An Computer Company applied this measure to face the danger of complete collapse, and later they overcame this obstacle.

When a company's finances are in a difficult situation and there is no improvement after a series of rectifications, it seems that it is at the end of the road, then it is necessary to consider applying bankruptcy protection measures. That is a mandatory choice. Bankruptcy protection abroad is nothing new, but in China it is rare. With the development of the market economy, new laws and regulations will inevitably appear, and it will have to approach foreign countries, so bankruptcy protection will certainly be a common thing in the near future. Along with increasingly fierce competition in the market, more and more new businesses appear, and the risks are also getting bigger. So before the company goes completely bankrupt, be decisive and seek bankruptcy protection, to give yourself a chance to start over. This is also an issue that businesses are very concerned about.