To be successful in business and to prepare for future challenges, risk management is crucial. Many brands use digital advertising and marketing in order to make their brand more relevant to the public. This is true even during times of crisis, such as COVID-19.
Brands used to only alter their structure in times of crisis. With the fashion industry changing, brands don’t have the time to rebuild themselves after a major setback. Brands must therefore adopt proactive risk management, including volunteering and maintaining relationships with local businesses and authorities.
Proactive Risk Planning
A company that manages risk proactively can deal with both long-term and short-term crises. This involves managing risk by identifying potential and drivers of risks, prioritizing them, and taking appropriate actions. Clothing companies may be exposed to a variety of risks.
Operational Risk
Operational risk is the risk associated with the quality of cloth and the health of the workforce. To reduce this risk, businesses must evaluate their operations and make improvements.
Financial Risk
Brands cannot produce money due to weak contracts or inability to sell inventories. This can be avoided by brands identifying their target audience and increasing sales. Brands can also ask for advance payments in order to manage their marketing costs and digital ads.
Supply Chain Risk
During the coronavirus outbreak, many brands suffered supply chain disruptions. They began to think about ways they could reduce this risk. One way to reduce this risk empirically is by increasing transparency between buyers and sellers.
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Compliance Risk
Brands work hard to establish their image with their customers, but this can be easily destroyed if they do not follow the rules established by government agencies. To solve this problem, brands should take corrective action and identify any gaps in control.
Industry Risk
There are often significant changes to the supply chain as a result of changing trade policies. Brands can be exposed to inventory risks that disrupt their business. To manage this risk proactively, brands need to be able anticipate changes in global markets, and adjust their business strategies.
Risk Management by Using Volunteers
By building a strong volunteer community, any organization can reduce risks. Volunteers are individuals who are very committed to the brand’s idea and are always ready to answer their calls. They will be the conduits that companies use to boost sales.
Fashion brands can create a volunteer community by participating in local events. Brands can tackle issues like literacy or poverty reduction and resolve them by forming a volunteer group. This group will improve the image of the brand in the community.
Improving government relationships
The government has a major role to play in defining the rules and regulations brands must follow. The condition of employees in companies has been compromised on several occasions. This leads to the temporary or permanent closure of plants.
Wendy Yu, Curator at The Costume Institute of the Metropolitan Museum of Art says: “It (fashion) has been used to express nationalistic and patriotic tendencies, as well as complex questions related to class and race, ethnicity and gender.
Brands must therefore maintain a good relationship with the government to support their initiatives. Brands can improve their relationship with policymakers through funding election campaigns and providing financial support in times of crisis. This allows brands to target social issues while building a strong consumer base that is emotionally attached to them.
Building Relationships with Local Business Champions
Any business will benefit from building relationships as they can create new customers and enhance their reputation in the business world. Local businesses have an advantage over big brands because they deal mainly with locals. They have a limited target audience.
Small businesses are better able to understand the needs of their customers and utilize better digital advertising and marketingthan large brands. Sales of small brands are a serious threat to big brands. According to studies, big brands have seen their market share drop by more than five per cent in several markets because of the growth of local companies. Brands need to develop relationships as part of a proactive strategy for risk management.
Maintaining a consistent supply is one of the items that fall under a brand’s proactive risk-management strategy. For this, brands need a good cloth supplier. Fashinza can be of assistance. Fashinza, a B2B platform for apparel manufacturing, allows brands to track orders, communicate with manufacturers and pay.
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