Risks are varied and often change. It
evolves according to the changes and evolution of the business environment.
There are many ways to classify the type of risk, depending on the field,
origin, function, scope, impact, occurrence and severity of harm…
However, we can generalize several common
risks in the business environment in Vietnam as follows:
First is financial risk. Financial risk can
be defined as the risks in the field of financial management such as credit
risk, exchange rate, interest rate, liquidity, investment, asset, liability and
cash flow… In recent times, many Vietnam companies are reeling from interest
rate risk (interest rate goes up too high) and investment risk (inefficient
investment); while banks are reeling from credit risk (bad debt). The risk in
exchange rate also caused many hardships to import businesses. After signing
the contract to purchase goods in foreign currency, the exchange rate increased
unexpectedly. Financial risks could be considered risk that covers all risks because
the result of these risks, whether they are non-financial, is more or less led
to financial losses.
Second is policy risk. Policy risk is the
risks related to Government policy. A new or changed policy can bring business
opportunities for this group of enterprises but can cause severe damage to
other business groups. The policy to open door or close door to foreign firms
may affect the operation of domestic enterprises. A tax policy changes could
make many business owners scared.
Next is strategic risk. It is defined as the
risks related to the planning and implementation of strategies. A strategy is
selected by emotion; lack of careful analysis can potentially lead to failure.
The multi-sectoral strategy of many enterprises recently is clear examples of
strategic risk when businesses participate in new industries that does not
based on its core competences. Even a properly planned strategy also has risk
of failure in the implementation process. Also, along the way of a long-term
strategy, there may be fluctuations that if businesses do not have the
appropriate adjustment steps, the risk of failure is unavoidable.
The fourth type of risk is brand risk, which
is the risk related to the image and prestige of the brand. A company that has
illegal activities, deceiving consumers, harmful to people’s health and
environment could make bad brand image. As a result, customer will boycott, the
company may become unprofitable and even bankruptcy. In other case, a company
trying to build a brand without protection, it will be imitated by competitors
or furthermore will also go bankrupt as a consequence.
The fifth type of risk is technology risk. It
can be defined as the risks related to technology. For example, desk phone is
almost dead with the development of mobile phone with cheap subscription fees.
Next, the seventh type is legal risk. Legal risk is
the risks related to the law. Enterprises can accidentally or intentionally
violate the law. On the other hand, law can also vary according to the negative
direction for the business. If enterprise does not update legal information and
conduct early identification of legal risks, business can easily fall into
situation of legal violation or loss of competitiveness when required to comply
with the law.
The eighth type of risk is human risk. Human
risk is the risks related to the corporate workforce. Talented people and key
personnel can leave the enterprise for any reason. The gray matter of the
enterprise (often accompanied by technological know-how and trade secrets) can
flow to competitors. In contrast, businesses may inadvertently acquire vandals
come to work in the enterprise. Incompetence and poor ethics general manager or
senior management is capable of making a business to become bankrupt. That is
not including other risks related to the strike, shortage or surplus of human
resources… In fact, human risk could par with the financial and business risks
because since its adverse effects are not inferior.
Ninth is operational risk, which is the risk
relating to management and
operation capacity of business, including management system, operational
process, policies, rules, regulations, operating procedures, the way of
management and administration and also the use of human in the operating
system. A loose management system can create multiple vulnerabilities, causing
loss of property and money; an unreasonable or lacking strict control operating
procedure may give rise to violations, leading to malfunction or damage. The
flaws in personnel arrangement are not only reducing the working efficiency but
also obstructing and even hazardous for the development of enterprises.
Tenth is the market risk, which is defined as
the risk related to the movement and changes of the market, including products,
customers, consumers, suppliers, partners and competitors. Changes in consumer
trends can make it difficult for many businesses. The new competition ways from
rivals may directly threat to the normal operations of the business.
Next is the contract risk. Contract risk is
the risks related to the signing of the cooperation agreements, economic
contracts and contracts of sale… The terms that lacks of clarity are
detrimental, leading to damages to the enterprise in case of disputes.
Twelfth is the security risk, which is risk
related to information. Technological know-how and trade secrets might be
revealed or leaks. At normal levels, businesses may be imitated by competitors.
More specifically, the entire plan or strategy can go bankrupt.
In addition, there are other types of risk
that could be mentioned as disaster risks (natural disasters, fires,
explosions, accidents, war, violence…), relational risk, communication risk and
risk in the application of information technology…
Most of these types of risk, enterprises are
commonly encounter. If they know how to manage risks, businesses are more
likely to evade, disable, minimize negative impacts or at least actively
embrace and respond in the most appropriate manner.
ANT Consulting is here to
assist you from the outset; providing corporate intelligence, risk advisory,
management consulting services that assist market entrance, and ensure
efficient business start-up operation. Our services are as following:
We strive to save your cost
by guiding you towards economical solutions that comply with local legislation
and procedures. We support you through early logistic solutions and carry you
through as your business grows. We aim to bridge the gap between
international best practices and local cultures and assist foreign companies
and organizations entering Vietnam market to overcome commercial and regulatory
issues.
We
could be reached at email: ant@antconsult.vn or tel: +848 3520
2779 . To learn more about us, please visit www.antconsult.vn
Further
information
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