Risk management is an important part of any new venture. Risks are things that have a probability of occurring and can impact our project or venture in a small , medium or large magnitude.
There are two types of risk. First is those that are manageable and second are those that you cannot do anything about. A war, flood, tsunami, sudden fire can be anticipated but not much can be done when they happen. These are primarily second kind of risks. They have a small probability of occurring though with devastating impact. If we can think about them in advance, it is good but it is better to concentrate on first kind of risk.
The first kind of risks are pretty known and can occur with varying impacts on our project. What makes them different from the second kind of risk is that we can anticipate them and can either prevent them for occurring or at least take workarounds if we cannot stop them from occurring.
One of the example is fire safety. It is possible that a fire may happen in a building. We know the risk and we install fire equipment, conduct fire drills and thus make the building fireproof.
In a venture, everything that we do has a risk associated with it. Developing a market, executing a project, hiring employees etc. all have elements of risk associated with them .
So as an entrepreneur we need to identify each and every risk that we can imagine and then take steps to mitigate them when they are about to occur.