When we talk about risk analysis, we are automatically referring to financial analysis , since it is necessary to have in-depth knowledge of a company's financial results in order to be able to evaluate it correctly.
Therefore, there are four important points that must be taken into consideration in this process:
1 – Understand your company’s financial information
To understand the dynamics of a company's operations and saudi arabia whatsapp data value generation in the financial market, it is essential to carry out a financial analysis .
The main vectors that should be analyzed are: financial statements , which will help to clearly understand the decisions that the company has made regarding investments, the result generated , that is, whether it is profit or loss, and also how the results are distributed . If it is profit, will the result be shared with the resource providers or will it be reinvested? Or will a mix of the two be made?
Having information about these three pillars makes it easier to carry out a consistent risk analysis .
2 – Evaluate working capital management
Knowing whether the operation has financing and whether it is the company's own or third-party financing is also important information for assessing the company's value. It is also necessary to map whether the loans are short-term or long-term. The more focused on financing the short-term operation with third-party capital, the greater the business risk, for example.
3 – Map the risks
Carrying out a risk management analysis means having a hasty view of what needs to be taken into account. Some risks can be anticipated and mitigated. Others require negotiations and the development of solutions that allow for better management of potential threats. The important thing is to map all risks completely and accurately.
4 – Understand the company’s value generation dynamics
Through financial analysis, it is possible to identify the company's value generation dynamics, i.e., understand how the company grows. Whether it is through acquisition or organically, whether it invests only in the local or international market, etc. Having this information is essential to support the company's strategic decisions.
One of the risk management techniques used by finance professionals is to gain efficiency in operations to reduce unnecessary costs and decide what to do with loss-making customers.
To do this, you need to:
Assess which investment projects cannot be postponed. Committing to an investment project means betting that it will yield a return in the future. If we are in a crisis situation, for example, the most coherent option is to choose to preserve the company's cash flow.
Work on deadlines. Increase payment deadlines and reduce receipt deadlines. Prioritizing this preserves the company's cash flow and increases its market value.
Carrying out a financial analysis of the company in order to understand the operation is the main recommendation for reducing risks, as it is essential to have knowledge about the business as a whole.