Page 39 - Insurance Times April 2022

capita levels higher than some developed countries. Despite
this apparent anomaly, most people would classify these
three countries as emerging markets. To know why, the
second key factor i.e., Instability should be considered.

Instability
The concern with many emerging markets is the uncertainty
over what might happen in the future. This uncertainty may
be political or economic, sometimes it is both. The causes
of instability are many and include religious or tribal
tensions, repressive regimes, domestic insurrection, war or
threat of war, economic problems, etc.

Economic uncertainty may arise as a consequence of
government actions or be the result of inherent
vulnerabilities - concentration in a few industries or management has become more prevalent in the past four
dependency on exports or aid flows, for example. The Asian or five years because there are so many avenues where
crisis well illustrates how interdependent some emerging business is vulnerable.
economies have become and how quickly the swing from
boom to bust can be. To increase the chances of success in today's tough business
climate it's important to reach for professional help when
Emerging economies, therefore, include those which are in it's needed to fill in the gaps in skills. Nobody in small business
the growth phase of the development cycle and are can physically wear all the hats they need to be successful.
vulnerable to internal or external forces that make them There are so many moving parts that require experts that
potentially unstable. They do not include those countries the business may not have. Because most small businesses
which are desperately poor and have little prospect of do not have the luxury of having a qualified risk manager
moving beyond this stage in the foreseeable future. on staff, they need to consider looking outside their business
for experts who can do the job. The biggest problem is not
Body having proper personnel to assess the risk. The business
owner may not be the best person. It is money well spent
Risk is broadly defined as the probability of an unforeseen
incident and its resulting penalty. Risk management is the to get a professional to do it.
identification, assessment and economic control of those
risks that can endanger the assets and earning capacity of Importance
a business. By implementing a risk management plan and considering
the various potential risks or events before they occur, an
In identifying the risks for a specific business, it's critical to organization can save money and protect their future. This
encompass every facet of the business, from the most is because a robust risk management plan will help a
obvious risks common to many enterprises to any unique company establish procedures to avoid potential threats,
risks a particular business might have. This identification minimize their impact should they occur and cope with the
process can include legal, physical, financial, human, results. This ability to understand and control risk enables
intellectual and technology risk issues. It's also useful to think organizations to be more confident in their business
about business risks as being non-entrepreneurial, such as decisions. Furthermore, strong corporate governance
fires and floods, and entrepreneurial, such as economic principles that focus specifically on risk management can help
forecasting and product development. a company reach their goals.

Affects of Economy Other important benefits of risk management
Although the poor economy makes it more difficult for many are:
businesses to afford the expenses of risk management, the Y It creates a safe and secure work environment for all
irony is that the need for protection is greater now. Risk staff and customers.

The Insurance Times, April 2022 39