To Create a Risk Management Solution It Is First Important That We Understand How Risk Management Works.
Risk Is the Effect of an Event or Series of Events That Take Place in One or Several Locations. These Events Can Be Positive and Negative in Nature. In the Fuel and Oil Industry a Potential Risk Would Be the Volatile Nature of the Marked. Price Fluctuations of Oil, Fuel or the Gas Industry Can Greatly Effect a Business's Bottom Line.
So It Is Therefore Quite Important to Identify the Consequences of Each of These Perceived Risks. This Can Be Done from Gathered Data or Brainstorming. So That You Have a Plan if One of Your Risks Materialized.
One Way of Avoiding Risks - Again We Take the Fuel Industry as an Example - Would Be to Implement a Zero Cost Collar Strategy. Zero Cost Collar Is Basically an Agreement Designed to Keep Your Fuel Prices Within an Agreed Price Range.
There Are Off-Course Many Other Ways Around Alleviating Risk - and It Is Important That the Right Strategy Is Implemented for Each Risk.