Elastic Risk Approach Plan Your Business Maturely
The concept of the elastic risk approach is planning of what steps should go forward in order to avoid all losses. Usually, the method applied is what risk will be obtained by changing the price of a product, if instead, it will give a loss because it will not sell in the market then the decision can be canceled.
Talking about elasticity is indeed a lot of use for running a business, you can calculate changes in demand from the market using several formulas that are well known in economics.
In general, elasticity can be interpreted as a change of a variable based on the number of other variables. For example, if you sell a drink on the first day sold 10 cups, on the other day it turns out there are 2 consumers who did not have time to buy because the product has run out. That means changing 2 cups of drinks is elasticity in your sales.
While the elastic risk approach is a way to weigh the risks that will be faced in carrying out a decision. Risk itself means the risk in economic calculations while the approach is the approach.
Always Consider the Bad Possibilities
If you only take into account the good possibilities, then the financial plan is very naive if implemented in a company, purchasing power and interest in the market will always change with the times. The attractiveness of the product will also decrease with time, if there is no periodic reshuffle, the product will not dance anymore.
A very clear example is that many businesses that have only been running for months have closed because they have not considered the risk of elasticity in the economy. The use of an elastic risk approach is needed to make every business person aware that the worst is possible.