E. g Agricultural regulations affecting pesticides in
ndia requiring certain, moreexpensive pesticides can affect markedly net income and cash flow.Stay flexible.
ake a culture in the organization that allows change to occur easily and smoothly atall levels of the organization.
any companies that suffer without a reason are the oneswho do not want to mould themselves in a new culture.For example:-Enron, shortly before the fall, did not change its risk management policiesto accommodate the new accounting standards. The company decided to bypass thestandard and opened itself up to high-risk energy and commodity transactions. WhenEnron tried to mitigate the financial hit with creative accounting, disaster ensued.
ANTIFY THE POTENTIAL DAMAGE
If a law is about to be enforced soon do not wait for it to be enforced rather act as if theregulation has been enforced already so you get to know ahead of time what impact itwill give on the business.E. g:- If it is a new accounting standard start incorporating it in your budgets cash flowsand other financial statements so you get to get a true picture of what amount of capitalshould be kept aside to implement changes and what will be the impact on your revenueand costs
lan for a worst-case scenario:-Do not be conservative while making changes .If changeis coming so plan it before hand. If you have less capital reserves arrange for a back up or save more .Risk is expecting the worst case scenario and being prepared for it financiallyso it will help you navigate the unknown and potentially stormy waters of change.