Don’t Leave Risk to Chance

Markets can remain irrational a lot longer than you and I can remain solvent.

– John Maynard Keynes

Most consulting and accounting firms give some thought to the risks facing their clients.  But they do very little hard analysis.  This is understandable, since their traditional areas of expertise do not include risk management.

There is often a reluctance to talk about risk in daily business.  When we talk about risk we admit the possibility that we are wrong about our assumptions, analysis, and understanding.  Making a mistake is not the trouble; the problem is failing to anticipate certain possible outcomes.

So risk is an unavoidable fact of business and economic life.  We cannot afford to leave risk to chance.

FinEx is one of the very few in the business world apply risk management methods to the problems of small- and medium-sized businesses and non-profit organizations.  As a small business well-versed in risk management and analysis, FinEx is a leader in this area.

We make it a standard practice to integrate risk analysis into our consulting activities, much to the benefit of our clients.

Before the financial collapse and the resulting recession, many business executives and financial consultants believed that risk analysis and risk management were best suited for large corporations and financial institutions.

Clearly, this is no longer the case. In fact, it never was. Which is why FinEx has over 25 years experience in this essential area of business and financial management.

This does not mean it is necessary to worry constantly about risk. But it does mean it is advisable to make an effort to understand the risks facing your business. Only then can you begin to manage them.

Remember, the purpose of risk modeling is not to be able to say something with certainty.  Risk modelling allows us to say things with a degree of confidence.

Here are some testimonies to the importance of analyzing risk.  Bloomberg ran a  story on the failure of risk management at a major hedge fund and Pragmatic Capitalism posted some intelligent comments on the need for risk management.