- Risks and threats foreshadow business crises
- Zimbabwean companies must invest in cybersecurity tools
- Data compromised as a result of globalization is the biggest risk that companies are currently facing
Harare- When considered in the context of the broader international business community, business risk represents a significant threat to firm operations. Zimbabwean firms are not immune to these risks, and this piece will look at the dangers that are particularly impacting them. In the particular situation of Zimbabwe, the article will also go over strategies for managing these risks. A business risk is any exposure to a variable that could reduce a company's profits or result in its insolvency.
Business risk can originate from a variety of sources, such as changes in consumer needs and preferences, the state of the overall economy, and governmental rules and regulations. Despite the fact that businesses may not be able to completely eliminate business risk, they can take steps to mitigate its consequences, such as developing a strategic risk plan.
Risks and threats foreshadow business crises. While some hazards are specific and based on the type of business or industry an organization is in, others are general and present a risk to all corporations. In this case, only situations that are pertinent to the circumstances in Zimbabwe would be taken into account. There must be a current crisis management plan in place to deal with it when the threat manifests. When managing their businesses, managers should consider risk management as a critical tool.
Data Breaches
The prospect of having their data compromised as a result of globalization is the biggest risk that companies are currently facing. It is now a matter of when a breach would occur for a corporation rather than if it will. Many data breaches have been reported by organizations as a result of the ever-expanding digital world. In 2018, Justice Priscilla Chigumba, the head of Zimbabwe's electoral administration authority, claimed that accused hackers had lately infiltrated the database and taken crucial information on the biometric voters' roll. This is an example of a serious data breach that happened in Zimbabwe.
The largest data breach to date must be the Yahoo incident, which ultimately compromised the data and private information of nearly 3 billion individuals. The incident occurred in 2013, according to Yahoo's announcement that hackers had acquired access to 1 billion accounts in its database. Despite the company's suggestion to clients to update their encryption methods and reset their passwords, Yahoo came under attack once more. All 3 billion of Yahoo's accounts had experienced data breaches, the company reported in 2017. Although some information, including credit card numbers and passwords, not being disclosed, names, phone numbers, and dates of birth were.
Facebook has also drawn a lot of attention lately for violating the privacy rights of its users. Yet, a different noteworthy instance raised a lot of doubts. More than 540 million people's Facebook activity was made publicly accessible on the Amazon Cloud Computing service. The 540 million users' likes, comments, and other data were accessible to everyone on Amazon's Cloud services. Zimbabwe's Cyber Security and Data Protection Bill has been completed to address the issue of data breaches.
Solution: Zimbabwean companies must invest in cyber security tools. One business that offers these options is Dandemutande. In addition to other services, the business provides cloud and cybersecurity solutions with 24/7 customer support to boost business performance and reduce risk appetite. Regrettably, many Zimbabweans are unaware of the importance of cyber security solutions unless they become a victim of a breach.
Climate Change
The biggest operational risks to enterprises will come from natural disasters and the harsh weather brought on by climate change. This risk almost certainly involves many parties as stakeholders, and how well or poorly businesses are able to manage this risk is widely watched. Companies are under a lot of pressure to help combat climate change, so it's critical to be prepared for the consequences.
Retailers are now selecting suppliers who use environmentally friendly practices to appeal to the consumer. Other businesses are providing sustainability data with investors because they realize how it affects their bottom line. Additionally, some businesses are developing their own regulations instead of waiting for the government to do so. All of these companies are gradually changing in order to remain viable and competitive in a market that emphasizes the environment. Value chain risks and physical risks are the causes of these adjustments in response to the effects of climate change on business.
The value chain refers to the procedure a company uses to increase the value of a product. The design, production, cost, and distribution of a product could all be covered by this process. A company that extracts raw materials from the earth, processes them in a facility, determines a price, and then sells the finished product, for example, has added additional value to the raw resources. Climate change may affect each stage of the value chain.
Physical risks: These hazards arise when a weather incident damages or incapacitates a company's infrastructure, raw materials, or other assets. These dangers may include climatic catastrophes like floods and droughts. While no business can stop an impending weather disaster, businesses can be ready for physical hazards by analyzing their exposure and adopting precautions against the most likely outcomes.
As a result of weather-related catastrophes, scarce or difficult-to-access goods may become more expensive as a result of climate change. Lower supply, higher demand, and higher pricing are the results. The rate of climate change may have an impact on consumer behaviour. For instance, consumers may switch to alternative energy sources or renewable goods, making standard items and systems unpopular.
Solution: As they become more worried about the environment, governments around the world are gradually putting additional regulatory limits on corporations. In Zimbabwe, banks must now have a person in charge of ensuring that the boards of directors adhere to the ESG principles. Businesses will search for ways to run in this that are eco-friendly.
Inflation
All business owners have a fear of inflation. They claim that cost increases pose the largest threat to their business. To combat this, business owners must raise prices to cover the effects of inflation. The current inflation rate in Zimbabwe is 229%. Because of this, business owners are compelled to make predictions about how inflation will behave in the future, thereby driving up costs. Such high rates of inflation are detrimental to Zimbabwean corporate operations. Financial difficulties caused by price increases routinely impact businesses in all industries.
Solution: Companies must cut costs on their own to deal with rising inflation. Zimbabwean businesses should automate operations to streamline them and avoid hiring more staff. Small firms can reduce their costs by outsourcing to save money and get ready for price hikes. Business owners should take advantage of this chance to borrow money to expand their enterprises without having to worry about filing for bankruptcy. The optimum time to take on debt is when there is high inflation since this lowers the interest rate that must be repaid on debt, which benefits businesses.
Failure To Innovate
The biggest risk for Zimbabwean businesses is a lack of innovation. Even the most prosperous business that controls the market share in its sector may have issues if it rests on its laurels. A lot of experimentation goes into innovation, and most of it fails. Therefore, it can be said that having a high tolerance for failure is a key requirement for every successful innovation initiative.
Solution: Zimbabwean businesses should constantly be aware of emerging market trends and look for opportunities to copy and create original products from what they observe to be popular in their local marketplaces. Innovation helps businesses maintain a competitive advantage.
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