4 Ways to Be Proactive About Recession Risk

Inflation is the highest it’s been in decades, and that has businesses and consumers worried about an impending recession. Recessions can wreak havoc on a business, and while your organization likely has a plan for everything from natural disasters to cybersecurity, it’s important to have a GRC plan in place to manage recession risk, too. 

What is Recession Risk? 

A recession is a consistent decline in macroeconomic performance, typically for two consecutive financial quarters. While it’s easy to panic at the first sign of a recession, it’s a natural part of any economy. Economies expand and contract, and a contraction is necessary long-term for growth.

We can’t predict how long or severe a recession will be until it arrives. Some are mild, while others, like The Great Recession, are devastating. This means organizations should prepare for the worst while hoping for the best.

You can’t control the severity of a recession and even the most “recession-proof” businesses will feel the sting from one. But you can control how your business reacts to it through recession risk management. Recession risk management involves identifying recession-related risks, taking steps to mitigate them, and monitoring those risks over time.

Even the most “recession-proof” business is at risk of the adverse effects of the economy. But with recession risk management, your team comes up with strategies to weather an economic downturn. Good recession risk management ensures an organization is equipped to: 

Maintain profitability Increase consumer confidence Maintain cash reserves 4 Strategies to Proactively Manage

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