Which strategy is recommended to further reduce risks in a business?

Having a contingency plan is crucial for reducing risks in a business because it prepares the organization for unforeseen events and challenges. A contingency plan outlines specific strategies and actions to be taken in response to potential risks, such as natural disasters, economic downturns, or operational disruptions. This proactive approach ensures that businesses can respond swiftly and effectively to mitigate the impact of these risks, thereby enhancing their resilience and sustainability.

By having a clear plan in place, businesses can minimize losses, maintain customer trust, and safeguard their reputation during crises. This strategic foresight not only protects the organization but also instills confidence in stakeholders, including employees, investors, and customers, as they know the business is prepared to handle unexpected situations.