5 POTENTIAL RISKS TO E-BUSINESS

Nowadays, the Internet plays an important role in bringing the great opportunities and benefits for companies. However, everything has both sides, it also comes along with a number of risks of application for business.

In order to achieve your goals of adopting the Internet in supporting business processes, it’s necessary to follow up these steps: Identification, Analyzation and Response.

In a documentary related to information technology management, 5 factors of risk that are also quite match for e-business adoption were mentioned. The 5 factors of e-business risk you should be actively aware include:

• Technology risk

• People risk

• Structure/process risk

• Market risk

• Financial risk

Answering some key questions under these factors can help you identify, analyze and respond to the risk associated with your adoption of internet and mobile for business and marketing.  Keep in mind that not all questions or perhaps much more questions might be applied, depending on your situation and context.

1. Technology risk

Information and communication technologies are at the heart of an e-business. Properly managed, these technologies become a key enabler of business success. But what if things go wrong? If these technologies form a ‘digital nervous system’, an organization that depends on them will find itself in trouble when they fail. You can break down the technology risk category into hardware, software, and network if you prefer, but generally, what you should be asking here include:

• Is the technology you plan to use familiar to users or completely alien to them?

• Is the technology used secured?

• Will the technology be available in time for you to meet your objectives?

• Will hardware, software, and networks function properly?

2. People risk

It sounds somewhat negative to say that ‘people’, who are managers and staff, are a source of risk. They are also the most potent force, which a company has to reduce its risk exposure. Nonetheless the purpose here is to be systematic and it is therefore necessary to consider the ways in which a company’s personnel can give rise to business risks. Here you need to answer the following questions:

• Does your organization have or can you find people with appropriate skills you need to succeed?  Do people have the proper managerial and technical skills? Do they have enough experience?

• Does the management support your plans?

• Is there a project champion? Is the champion influential enough in the organization?

3. Structure/process risk

The effectiveness and efficiency of a company’s business processes can give rise to a further set of risks. Arguably, these are risks that a company brings upon itself, perhaps through a preoccupation with the more visible aspects of managing day-to-day operations. Two examples will be considered – intellectual property and reliability of delivery. The questions to be answered include:

• What is the degree of change that adopting e-business will introduce into the user areas and business procedures?

• How many distinct user groups does the e-business initiative need to satisfy?

• With how many other systems does the new e-business system need to interact?

• Does the organization have processes in place to complete the implementation of digital business successfully without negatively affecting the brand?

4. Market risk

There’s a ton of risks hidden in the marketplace where you run your business. In order to give you a deep thought and sharpen sense, you just have to focus on these questions and answer them to find out the causes and solutions:

• How relevant is e-business for your marketplace?

• Are your customers or users of your proposed e-business system already online? If they are not online, what does it require to get them online? Can you influence their online status? To what extent and at what cost?

• To what extent have your intended users' adopted technology? What are their skills in this regards?

• What are the competitors doing?

• What exactly are your plans and have you taken into consideration the situation on the ground? Can someone easily copy and improve on your plan making it a waste of your time and money?

5. Financial risk

Last but not least, finance is the key as well as the bones of every business. A company's financial risk is related to the company's use of financial leverage and debt financing, rather than the operational risk of making the company a profitable enterprise. Financial risk is concerned with a company's ability to generate sufficient cash flow to be able to make interest payments on financing or meet other debt-related obligations. Obviously, a company with a relatively higher level of debt financing carries a higher level of financial risk, since there is a greater possibility of the company not being able to meet its financial obligations and becoming insolvent. And, your questions are right below here to answer, include:

• Do you have the finances to successfully implement your plan?

• Are all relevant stakeholders in support of your plan and to what extent?

• What are your expected returns? Are you certain they are realistic?

• If there are setbacks, can the organization afford to continue with the plan?

• Will you be making the best use of your organization financial resources?

Answering these questions and probably others depending on your particular situation might help you identify the risk associated with your adoption of internet and mobile in supporting your business processes. You can then analyze such risk and respond accordingly. In responding you might want to develop options and define strategies for reducing negative risk and enhancing positive risk.

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