It’s no secret that crypto is a highly volatile currency, which could be a double-edged sword for crypto . In this article, we’re exploring how this volatility affects operators, how they manage financial risks, and what impact this ultimately has on us, the players. What risks do online Game, sportsbooks and portals like online casinos no kyc face, and how can they manage them?
What is risk management for Game?
Risk management is counterintuitive — planning for something you hope won’t happen. But it’s necessary for every business, including online and sportsbooks.
In general, risk management strategies follow a similar pattern. They go something like this:
- Identify the risks the business faces
- Analyze how, when, and where they could happen
- Rank the risks in order of potential threat
- Assign responsibility to monitor each potential risk
- Monitor business closely to ensure
- Respond quickly and decisively to adverse events
It’s pretty intuitive. However, how this will pan out depends on the risk the faces. The risk category weighs heavily on how much the business can do about it.
Potential risks
There are three main types of risks that face:
Operational — the most preventable. These are the risks of having hiccups in daily business processes, so the better the business is, the lower the risks are.
Strategic — events like a market failing to develop at the rate you anticipated when you first entered it. Companies handle strategic risks by accepting a certain level of risk and creating contingency plans in case those events pass.
External risks are beyond control and often beyond the ability to predict. In iGaming, the most common external risks are regulators’ frequently mercurial moods, though the industry isn’t immune to other disruptive events.
How to prevent risks?
There are a few strategies that crypto operators employ to manage financial risk. Let’s take a closer look at each strategy for risk management currently commonly used by many companies.
Hedging involves taking offsetting positions in the market to mitigate the risk of price fluctuations. For instance, a crypto that accepts crypto payments may also short-sell coin futures to offset the risk of a decline in value.
Stablecoins — These cryptocurrencies are pegged to the value of a stable asset, such as the US dollar. They provide a more stable form of payment than traditional cryptocurrencies, helping crypto avoid some of the volatility.
Real-time conversion — Crypto operators can convert cryptocurrencies to fiat currencies as soon as they are received. This helps them manage some of the volatility risks, but it also means that they do not benefit from any increases in the value of the cryptocurrency.
Operational
Operational risks are handled by optimizing processes, establishing clear responsibilities, and providing ongoing training and monitoring. Employees must be highly trained in all business processes and monitored and checked. Clear communication is also crucial.
Strategic
The first step to handling strategic risks is to accept that they might happen.
Then, a specific plan outlining the steps you’ll take to prevent an error from becoming a disaster is needed.
Partnerships can also be a source of strategic risk. In this case, it’s in your best interest to seek a platform that partners with reputable, licensed, longstanding software developers, game providers, and payment service providers.
External
For these types of risks, developing prevention strategies is pointless; they are inherently beyond one’s control.
To mitigate the effects of external risks, one step you can take is to tend to your company’s financial health. Highly leveraged companies — those who finance a large part of their operations by taking on debt — can function perfectly well in an average climate. However, in a significant disruption like COVID-19 or the 2008 financial crisis, missing sales targets for a single quarter can cause a tailspin.
If you need to know more about risk management, check out the paper at Alessa that delves into this topic.
Rockies Ripple is the founder and lead writer behind the independent blog tvplutos.com