How risky business practices can harm a company

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Risky business practices can cause tremendous harm to a Company. A lot of continued business that is enjoyed by a Company has an element of such based upon that Company’s reputation. The moment that any risky business practices come to light, then that reputation is damaged. Once this happens it is very hard to repair such damage. Often, an ensuing fall in business is seen.

It is surprising then, that so many Companies seem to be involved in some sort of business practice that puts their reputation and their own survival at risk. In some cases such behaviour is due to inefficiency and ignorance but others appear quite deliberate.

A risky business practice may not be one of some financial double dealing. There are many other ways that a Company could be considered to be carrying out business practices that are not sound. Times of recession bring lower budgets for safety and other operational areas of a business and this can bring working practices closer to the edge of risk.

Even though a Company has a good reputation overall, it can be that individuals within it may not be working safely. Either physically or by the way they carry out the Company’s business. This means that if Middle Management are not well trained and effective, and that Company rules are not clear and concise; even the actions of one employee can cause harm to a Company’s reputation.

Sometimes, even the rumour of risky business practices can bring harm to a Company. Certainly, a large Company trades upon its reputation when it competes in the share market, any harm here by risky business practices and share prices can drop dramatically to the point that the Company is put out of business.

There are some business areas where not only the Company carrying out such risky practices are in danger of harm, but the public is placed at risk too. Transport systems for instance, and anything to do with the food industry. This is why such areas are bound by tight Governmental legislation. However these areas too are liable to bad practice. This is particularly true when tenders for business are concerned.

The reason for this is that Company’s compete to win a particular contract and margins are squeezed to bring the price of a bid down. Once the bid is won, the successful Company will seek to make as much profit as they can from their newly gained contract. One way of increasing this margin is to cut back on staffing levels and to make safety margins and quality controls as tight as possible to reduce costs. Such actions increase risk and if the Company does not carry out effective risk management then disaster looms.

It can be difficult for Company’s to be profitable and still not come close to risky business practices, particularly if the financial market is in a recession. However, taking such risks can eventually turn back on such a Company costing them far more than the initial perceived savings.


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