External risks are hard to manage

Every business and investment decision requires analysis of risk and return. What do you expect to happen and what could go wrong? What can you do to avoid or protect yourself from the downside risks?

These are hard questions to answer. There are always many uncontrolled variables, unknowns and uncertainties. It is important to focus on what you can control. Manage what you can to achieve the most favourable results under changing circumstances. Be aware of the external environment that you cannot control, but don’t be distracted by the drama and the background noise that is irrelevant to your business or organisation.

External risks that are relevant and may affect your decision-making and the results include: economic cycles, interest and exchange rates, labour availability, government policy and regulations, trade restrictions, global political events and environmental disasters.

Internal risks that are subject to management control and response include: dependence on key customers, suppliers, and employees, contractual relationships, security, insurance and legal liabilities, changes in customer demand, competition, and applicable new technologies.       

What can you do to minimize risk and maximize returns?

Be aware of external risks and take care of the internal risks that are under your control.

Be an Enlightened Entrepreneur.

Your Uncle Ralph,

Del Chatterson