Risk is an inevitable part of any direct selling business and it's the potential threats to the organization that impacts negatively if it happens. From starting to running a successful business the risk is always there in every part of the organization. That's why risk management in direct selling is considered the most critical activity to focus on.

What is risk management?

Risk management is a systematic process of identifying, assessing, controlling, and monitoring various organizational risks. Your direct selling can not flourish if you are not properly managing the risk. However managing the risk is not a simple task as it said, controlling the risk to eliminate and mitigate loss requires knowing what those risks are. Identification of various direct selling risks is the first stage in risk management.

Risks in a direct selling business

A direct selling business can be affected by a wide range of risks stemming from various internal and external factors of the organization.

>> Legal and regulatory risk

Legal and regulatory risks are those risks that are raised due to non-compliance with various legal or regulatory requirements. The practice of pyramid schemes in direct selling businesses ruins the reputation and authority of the direct selling industry. Many popular direct selling companies have been penalized in the past for conducting illegal practices and non-compliance. Complaining with the laws and regulations in the direct selling industry is very imperative for avoiding these risks.

>> Operational risk
Direct selling business profit mainly depends upon the operational efficiency of the organization. The risk associated with the operational activities of the business is known as operational risk and it is stemmed from the various errors and failures in operational activities. Avoiding various operational risks can improve the operational efficiency and profitability of the organization.

>> Financial risk
A risk that causes financial losses to the direct selling organization is called financial risk. It arises due to various reasons, for instance, non-compliance with various legal and regulatory requirements often drives the business into huge penalties.

Risk Management mainly helps direct selling businesses control various risks causing losses to the organization.